What is 'Financial Accounting'
Financial accounting is a focused branch of accounting that retains path of a firm's financial transactions. Using standardized rules, the transactions are recorded, summarized, and presented in a financial report or else financial statement such as an income statement or a balance sheet. Businesses matter financial statements on a repetitive schedule. The statements are considered external because they are given to people outdoor of the company, with the prime recipients being owners/stockholders, as well as certain investors. If a company's stock is publicly traded, however, its financial statements (and other financial reporting’s) incline to be extensively spread, and information will likely reach secondary receivers such as competitors, customers, employees, labor organizations, and investment analysts.
If it is imaginable to develop an accounting theory (Hendriksen and McDonald) then how do we approach its development? Research in this area has centered on traditional approaches, regulatory approaches and what has come to be observed as new approaches. Following are the approachesTraditional approachesTraditional appro...read more
According to both Hendriksen (1977) and McDonald (1972) the development of an accounting theory should be possible. McDonald argues that a theory must have three elements:Encoding of phenomena to symbolic representationManipulation or combination according to rulesTranslation back to real-world phenomena....read more