Taxation
Financial Accounting and Reporting
Financial Accounting and Reporting – Meaning:
Financial Accounting and Reporting refers to the process of
recording, summarizing, and presenting financial transactions and performance
of a business in the form of standardized financial statements. It provides
clear and accurate financial information to external users such as investors,
regulators, creditors, and tax authorities.
Key Components:
·
Financial Accounting:-
o Involves
recording daily business transactions (sales, expenses, purchases, etc.).
o Uses
standard accounting principles (like IFRS or GAAP).
o Focuses
on the past performance of a business.
·
Financial Reporting:-
The process of preparing and presenting financial data in the
form of official reports or statements.
Includes:
o Income
Statement (Profit & Loss)
o Balance
Sheet
o Cash
Flow Statement
o Statement
of Changes in Equity
o Notes
to the Accounts
Purpose:
Provide transparent, consistent, and comparable financial
information.
Help external stakeholders:
o Understand
the financial health of a business.
o Make
decisions about investing, lending, or regulating.
Comply with legal and tax requirements.
Service Related FAQ
What is the main objective of Financial Accounting?
The primary objective is to provide accurate and reliable financial information to stakeholders such as shareholders, investors, management, regulators, and creditors for decision-making.
What is Financial Accounting and Reporting (FAR)?
Financial Accounting and Reporting (FAR) refers to the process of recording, classifying, summarizing, and presenting financial transactions of a business in compliance with applicable accounting standards, laws, and regulations.
What is the role of auditors in FAR?
Auditors examine financial statements to provide independent assurance that they present a true and fair view and comply with relevant standards.
Why are accounting standards important?
Accounting standards ensure consistency, comparability, transparency, and reliability of financial information across businesses and industries.
What are financial disclosures?
Financial disclosures are additional notes and explanations provided along with financial statements to give clarity on accounting policies, risks, contingent liabilities, commitments, etc.
