Financial accounting is the system where the financial information of an entity is accumulated, assessed, and presented in suitable formats. Normally, each economic entity comes with the goal of maximizing the value for its stakeholders. With this end, a financial accounting report focuses on offering benchmarks for analyzing the efficiency and role of the Board of Directors and management of a company.
Such reports are regularly published and have all the crucial information to offer guidance towards the future direction and course of the equity market. And, financial accounting is an important part of the advanced syllabus at the best bcom college in Jaipur. So, if you have been planning to go for a B.com. Degree, here’s informing you a bit more about financial accounting.
Important users of financial accounting reports
Financial accounting reports are crucial for any company for multiple reasons. It is especially important for the following users:
Usually, employees are concerned about the profitability and financial performance of the firms that they work for. It shapes their decision to stay or leave the firm as per their best interests.
Lenders are typically interested to know about the financial solvency of the company and if the loans repaid by them to the firm will get honored.
Financial analysts and investors:
The investors go through the financial statement of the companies to consider whether they should sell, buy, or hold their shares. Equity research analysts use the reports as the base to put forward their assessment of the price targets and expectations of the earnings of the firm. Thus, it guides the sentiments of the financial analysts and investors regarding the market scenario.
Suppliers and other creditors:
The suppliers and other such creditors study the financial accounting reports to consider if the amount owed to them will be received as per expectation. It also outlines the probable future course of demands for the firm’s supplies.
Types of financial statements
There are three different types of financial statements that you will be able to work upon after completing bcom courses in Jaipur.
Cash flow statements:
Cash flow statements deal with the outflow and inflow of cash from the company. It breaks down the analysis into financing activities, investing activities, and operating activities.
Income statements, also known as profit and loss statements, show the expenses and revenues of the company during a specific period. It shows if the company has lost or made money over a particular period of time.
Balance sheets are held as a glimpse of the financial position of the company at a specific time. It lists out the owner’s equity, liabilities, and assets. Net assets refer to the difference between liabilities and assets.
So, now you have a brief idea about what financial accounting reports are all about. You will get to know more about financial accounting and preparing the reports when you join the B.com. course at a reputed college in your area.