financial accounting
External stakeholder reporting
Financial accounting is the branch of accounting concerned with preparing financial statements for external parties such as investors, creditors, and regulators.
Unlike managerial accounting, which serves internal decision-making, financial accounting follows standardized rules and reporting frameworks to ensure consistency and comparability across organizations.
The core outputs include balance sheets, income statements, and cash flow statements.
The company's financial accounting revealed a significant increase in quarterly revenue.
Master accounting record
- double-entryAccounting with paired entries
- journal entriesRecorded personal observations
- debitsRecorded account reductions
- creditsUnits toward graduation
trial balance · chart of accounts · accounts receivable · accounts payable · posting · accruals · adjustments · reconciliation
Assets-liabilities-equity report
- income statementPeriodic profit-loss report
- cash flow statementReport of money entering, leaving
- disclosureAct of revealing information
- quarterly reportPeriodic corporate financial disclosure
annual report · earnings report · retained earnings · depreciation · amortization · equity · fair value · footnotes
Outside financial records examiner
- internal controlsOrganizational oversight procedures
- assuranceFirm promise or certainty
- verificationProving something accurate
- materialityState of being consequential
CPA · attestation · opinion · sampling · audit trail · disclaimer · peer review · Big Four
Capacity to generate gain
- liquidityConvertibility to cash
- solvencyCapacity to pay debts
- ROEThree-letter military or financial abbreviation
- debt-to-equityBorrowed funds versus ownership
gross margin · net income · earnings per share · working capital · trend analysis · profit margin · benchmarking
Financial reporting conventions
- materialityState of being consequential
- conservatismPreference for existing institutions
- consistencyReliable adherence to standards
- comparabilityLikeness permitting evaluation
going concern · full disclosure · convergence · pronouncements · interpretations · conceptual framework
Enforced rules and standards
- Sarbanes-OxleyCorporate governance reform law
- SECStock market regulator
- tax lawRules governing government levies
- oversightSupervision or inadvertent omission
enforcement · fiduciary duty · governance · ethics · accountability · transparency · internal controls · whistleblower
general ledger
Master accounting record
- double-entryAccounting with paired entries
- journal entriesRecorded personal observations
- debitsRecorded account reductions
credits · trial balance · chart of accounts · accounts receivable · accounts payable · posting · accruals · adjustments · reconciliation · bookkeeping
balance sheet
Assets-liabilities-equity report
- income statementPeriodic profit-loss report
- cash flow statementReport of money entering, leaving
- disclosureAct of revealing information
quarterly report · annual report · earnings report · retained earnings · depreciation · amortization · equity · fair value · footnotes · 10-K
external auditor
Outside financial records examiner
- internal controlsOrganizational oversight procedures
- assuranceFirm promise or certainty
- verificationProving something accurate
materiality · CPA · attestation · opinion · sampling · audit trail · disclaimer · peer review · Big Four · independence
profitability
Capacity to generate gain
- liquidityConvertibility to cash
- solvencyCapacity to pay debts
- ROEThree-letter military or financial abbreviation
debt-to-equity · gross margin · net income · earnings per share · working capital · trend analysis · profit margin · benchmarking
GAAP
Financial reporting conventions
- materialityState of being consequential
- conservatismPreference for existing institutions
- consistencyReliable adherence to standards
comparability · going concern · full disclosure · convergence · pronouncements · interpretations · conceptual framework
regulations
Enforced rules and standards
- Sarbanes-OxleyCorporate governance reform law
- SECStock market regulator
- tax lawRules governing government levies
oversight · enforcement · fiduciary duty · governance · ethics · accountability · transparency · internal controls · whistleblower · penalties
- accountingbookkeeping, ledger, balance sheet, general ledger, accounts payable
financial accountingcost accounting
Recording and analyzing operational expenses
budgeting · strategic planning · forecasting · performance management
financial accountingstrategic planning
Defining organizational direction systematically
corporate strategy · business development · entrepreneurship · marketing · product development
account, finance, finances, financial, financing, accounting, financed, financier, financially