What is and Who needs Financial Accounting?

What is and Who needs Financial Accounting?

Financial accounting involves a process of recording, summarizing, then reporting any and all transactions that result from business operations. Over a period of time, financial accountants will prepare a balance sheet, income statement, and cash flow statement from transactions during a specified period. These reports display the company’s performance during this time. In order to provide consistent information to creditors, regulators, investors, and tax authorities, financial accounting takes years of expertise and being up-to-date on the most current rules and regulations. Regulatory and reporting requirements a business faces depends on the type of business it concerns. For example, public companies or businesses in the U.S. are required to perform financial accounting in accordance with GAAP or generally accepted accounting principles

Small businesses without an established accounting department, typically have to outsource these services to accounting firms and financial experts. When looking for financial experts in Los Angeles, it’s important to find a firm that offers a number of services, is accredited and experienced. One of the best financial accounting in Woodland Hills is MBA Financial & Accounting Solutions. MBA Financial was voted Top 10 Best Accounting Firms in Los Angeles. This Los Angeles accounting firm provides services in bookkeeping, tax preparation, business formation, payroll services, business consulting, QuickBooks, CDTFA, and more. 

The five main financial statements used in financial accounting are classified by type of financial data. These consist of expenses, assets, liabilities, revenues, and equity. For example, revenue and expenses can include everything from R&D to payroll and can be reported on the income statement. MBA, financial accounting near Woodland hills, will determine the net income at the bottom of the income statement. Balance sheets can show assets, liabilities, and equity accounts. MBA financial accounting in Los Angeles can use this to report ownership of the company’s future economic beliefs. 

Financial Accounting typically follows either the cash basis or the accrual basis of accounting. The accrual method consists of recording transactions when the revenue is recognizable and the transactions have occurred. Cash accounting on the other hand records transactions only when the transaction is an exchange of cash. Expenses for the cash basis method is recorded upon payment of the obligation and revenue upon receipt of payment. In addition to these two types of financial accounting methods, there are also two types of accounting, financial and managerial based on the type of company or business. Since there are certain accounting rules that don’t translate well to be used by internal management for operation management and internal business analysis, different accounting rules and procedures are used. While managerial accounting aims to help managers within an organization make decisions, financial accounting provides information to parties outside. Financial statement preparation is most relevant to nonprofits, corporations, and small businesses. 

A CPA or Certified Public Accountant license is required to perform financial accounting within the United States. The team at MBA Financial & Accounting is CPA certified and will ensure the most accurate and efficient reporting for your business. For the best financial accounting near Los Angeles, visit MBA Financial & Accounting’s list of services here, or to talk to an experienced CPA certified professional today call (800) 576-5746.