Financial Management (13–23%)
7.1 Financial Accounting and Finance
Various topics are included in this section, including those listed next.
(a) Basic Concepts and Underlying Principles of Financial Accounting
Financial accounting (FA) is the language of business. All business transactions eventually end up in financial statements. Accounting principles are used to classify, record, post, summarize, and report the business transactions among various parties involved. Accountants apply their professional standards to analyze business transactions, prepare estimations, and report business events. The business transactions data accumulated in the chart of accounts are used to prepare the financial statements of an organization. Accounting principles and qualities of accounting information, the accounting cycle, different formats of financial statements, and account analysis are discussed in this section.
(i) Accounting Principles and Qualities of Accounting Information
(A) Accounting Principles
If company management could record and report financial data as it saw fit, comparisons among companies ...