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The Importance Of Financial Accounting

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An investment in knowledge pays the best interest. Several Salient attempts to undertake significant roles in addressing challenges in corporate reporting ended up in a development in certain areas of financial accounting, if not all.
The idea of financial accounting as a whole has the responsibility to identify the parties in business transactions and provide them with the information they need to do business in a fair and objective manner. In the same vain, the content of such information should be useful to present and potential investors and creditors, not excluding other external users in making rational decisions. The accounting practice requires that financial statements must be honestly prepared, continuously observed and all significant …show more content…

Accounting operates through basic principles and rules. There is a need to know that the purpose of financial accounting is not primarily to report the value of an enterprise. Rather, its purpose is to provide enough information for others to assess the worth of such enterprise. May, (1943, p.189 asserts; “it is an art, not a science, but an art of wide and varied usefulness”. An art that requires certain skills of implementing techniques and methods of presenting financial findings by following and implementing a universally accepted …show more content…

(Statement of Financial Accounting Concepts No. 5, paragraph 9).
Financial statement information is relied upon in a wide variety of business transactions and contractual arrangements and is utilized in a wide variety of decisions other than buying and selling stocks and bonds in an organized market.
The information in financial statements provides a convenient, if not essential, a basis for certain contractual arrangements such as those found in debt indentures, compensation programs, and acquisitions of enterprises.
To understand today, you have to search yesterday. Before 1920, after which the United States economy began to witness the industrial transformation, several meticulous efforts to properly document business transactions served as a broad barometer to some of today’s financial reporting models. Several accounting authors were on a quest to come up with several methods of reporting financial accounting reports of business concerns with several books on accounting published to explain relevant

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