Why Financial Accounting Is Important to Your Business

What is financial accounting? Financial accounting is a specific type of accounting that involves the preparation of financial statements for the purpose of supplying them to “decision makers.” The decision makers can include stockholders, banks, employees, and owners, among others. Within the field of accounting, Certified Public Accountants (CPA), Chartered Accountants, and Chartered Certified Accountants can all cover financial accounting.



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If you run a publicly traded business, or have a people or other business invested in your company, then financial accounting is incredibly important to your business. These reports are under held under much scrutiny by those outside the organization, especially those who might seek to invest in it down the line. As such, a qualified financial accountant will be able to help your prepare financial documents and make them available to outside individuals.

The main topics of accounting are financial statements and the “accounting equation.” The accounting equation reads “assets = liabilities + owner’s equity). The trial balance, which is a list of all the general ledger accounts for the business, is used to form the basis for preparing these documents.

Most business, especially small businesses, do not require a financial accountant. However, many  small business accountants are qualified to perform the functions of a financial accountant. As such, when choosing an accountant, you will want to find one that is well-qualified in a variety of accountancy fields to ensure the best possible outcome.

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Posted on May 30, 2012 at 9:00 AM