- What is financial accounting?
- Objectives of financial accounting
- Tax accounting
- Administrative accounting
We explain what financial accounting is, its requirements and objectives. Also, what is fiscal and administrative accounting.
What is financial accounting?
Financial accounting is called a branch of the accounting specifically dedicated to the financial transactions of a business. This implies summarizing, analyzing and informing about it both the general public and the shareholders of a business or government agencies dedicated to fiscal supervision, and from said information strategic decisions are often made within the organization.
Financial accounting is responsible for keeping a record of the economic history of any organization, and together with the cost accounting and administrative accounting, makes up the structure accounting of the same. Like the consumers of this information are usually entities external to the organization, it is also known asexternal accounting.
This branch of accounting is governed by national and international standards enshrined in the financial laws of the countries or regions. To that extent, it must meet the following requirements:
- Relevance. The information gathered must be relevant to the decision makingThere is no other reason to undertake this type of study. The reports are expected to be to the point and as complete as possible.
- Materiality. The information contained in said reports It is considered material when it can substantially influence the benefit or harm of real economic actors of the company.
- Reliability. Every accounting exercise must be truthful, free of errors or biases that could alter its content.
- Understandable. Any accounting information must be readable by its target audience and cannot have hermetic keys or languages.
- Comparable. The accounting reports can be collated to obtain an evaluation of different periods and obtain conclusions regarding the performance of the company.
Objectives of financial accounting
Financial accounting pursues the following objectives:
- Offer truthful and useful information about the financial situation of a company and the gain obtained by her.
- Create business economic memory by recording the operations carried out by the organization.
- Provide information regarding the operating results, financial position and cash flows of a company.
Tax accounting
Tax accounting deals with supervising and recording the operations of a company with respect to its tax obligations, based on the obligations contracted by every company according to the legal and legal framework in force in a nation.
Thus, the criteria of tax accounting will vary according to the place where the company operates, but it is always of great importance for the preservation of the heritage business as well as its public image, since an irresponsible management of its taxes it could be extremely counterproductive.
Administrative accounting
It is a branch of accounting that keeps the public informed management of the company, that is, to its management, regarding the financial situation of the organization and the registration of its economic movements.
That is why it is known as managerial accounting, since it prioritizes the usefulness of your information to allow the most accurate and informed management decisions possible.
Together with cost accounting and financial accounting, the administrative one makes up the accounting structure within any company or organization.