Let us start the Financial Accounting course for 7 days where we will be learning the basics of Financial Accounting in simple and easy steps.
Today we will learn, as to, what is Financial Accounting?
Financial Accounting is the art of recording business transactions in the books of accounts. Financial Accounting helps to know the financial performance( net profit/loss) and financial position(assets/liabilities) of a business entity.
Business transactions mean the exchange of goods and services between a business entity and customers or suppliers.
we will prepare the financial statements to know the financial performance(profit or loss of business) and financial position (assets and liabilities position)
Assets are the resources of a business entity that generates economic benefits for the business entity. The assets include furniture, machinery, cash and bank balance, closing stock, buildings.
Liabilities are the dues, debts, loans of a business entity. The liabilities include Short and long term loans and borrowings, due amounts to suppliers, bank overdraft.
Finally, we will prepare the Profit and loss account to know the business's financial performance ( Net profit or loss). we will also prepare the Balance sheet, that shows the assets and liabilities position.
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