Financial accounting does not include the valuation of assets. Financial statements are prepared in relation to the financial position of a firm at a particular point of time. The bookkeeping process involved in making these financial statements is known as bookkeeping. It involves keeping accurate books of accounts, ensuring that the accounts are correct and accurately reported and ensuring that the payment and receivables of a firm are accurate. The bookkeeping process also involves keeping the financial statement up to date and reflecting the true state of affairs at all times. Financial accounts must be prepared by an accountant who is qualified under the relevant accountancy rules and regulations and has the knowledge and experience to undertake the accounting work.
Financial accounts contain the financial transactions and details of cash flows and other financial activities of a firm. They include profit and loss account, income and expense account, trade and other accounts and internal revenue accounts. All these accounts have to be properly maintained and accounted for. These accounts also record all expenses incurred and profit or loss realized by the firm. The bookkeeping process helps the company to accurately report the financial data and give information about its financial status.
Financial reports are prepared by the firm’s accountant to give investors an overview of its financial performance and future prospects. The financial reports also assist a person to understand the working of a firm. The financial reports are prepared on a monthly basis so that they can be easily read and understood. A number of firms also prepare the financial reports for their employees so that they can view them regularly and understand them better.
Financial reports include the balance sheet, income statement, cash flow statement and the statement of cash transactions. The balance sheet provides the list of assets and liabilities of the firm. The income statement provides a detailed account of the earnings and profits of a firm. The cash flow statement helps the firm in determining whether it is making profits or losses.
The income statement includes an analysis of the working of the firm and shows the income and cash flow of the firm. It contains a detailed description of the income and cash flow of a firm and is also called the statement of cash position. The cash flow statement records the cash payments received by a firm on a month-to-month and quarter-to-quarter basis.
The financial reports contain more detailed description of a firm’s assets and liabilities than that provided by the balance sheet. The income statement does not only contain the income and profit and loss account but also reports the changes in the value of a firm’s property. These financial reports also provide information on the firm’s liabilities and the value of its property. The income statement also contains data on the current assets and current liabilities and the value of its property.
The balance sheet presents the details of cash balances held by a firm on a month-to-month and quarterly basis. The income statement also shows information on the equity value of a firm, debt to income ratio and the equity value of a firm. The balance sheet is also known as the statement of net worth and is prepared on the basis of all the assets of a firm and its liabilities.