Financial Accounting Essay - 924 Words

Financial Accounting Companies operate to achieve varies goals. They may be interested in providing a healthy work environment for their employees, in reaching a high level of control, or making contributions to civic and social organization and activities. However, to meet these goals, a company must first achieve its two primary objectives: earning a satisfactory profit and remaining solvent. If a company failed to meet either of these objectives, it will not be able to achieve its various goals and will not be able to survive in the long run. In order to show others how well one company has performed, financial statement is necessary, it is because Financial statements are accounting reported†¦show more content†¦Financing may be obtained from owners, lenders, or both. When owners provide financing, assets and owners equity on the balance sheet increase. When money is borrowed from lenders, assets and liabilities on the balance sheet increase. Neither of these financing events is reported on the income statement. When a business invests in assets like inventory or equipment, payment is made at time of purchase or the purchase is on credit, with payment due some time later. If assets are bought for cash, the balance sheet will report the asset purchased and show cash lower by the purchase price. If the item is purchased on credit, the balance sheet will report the asset purchased and a liability will have increased by the amount of credit extended by the seller. Neither of these investing events is reported on the income statement. The income statement reports only those events that reflect the measured net income from carrying out the operating activities of the business. In fact, the financial statement could be used for a wide rage of user. For example, from time to time, owners and creditors want financial information about the business. Owners of a small business may want information very frequently, e.g., monthly, to help manage the business. Creditors may call for information less frequently to evaluate the companys ability to repay aShow MoreRelatedFinancial Accounting And Managerial Accounting1613 Words   |  7 PagesIntroduction: Both financial accounting and managerial accounting provide important information about the business process. On the one hand, financial accounting provides only financial information to its internal users and external users. On the other hand, managerial accounting basically communicates about financial and non-financial information with internal users such as managers, employees and owners of the company. 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