Financial Accounting Overview

The following information is meant to be used as a general overview of Financial Accounting. As small business owners, it is very important to you understand the concept of Financial accounting and the key financial and social aspects which contribute to the well being of an organization. This overview will provide you information pertaining to the audiences, purposes, and natures of financial statements and managerial reports. This overview will also help to provide a general understanding of the importance of using financial accounting information in regards to making informed and ethical business decisions (Block & Hint Ch.1).

I. Financial Accounting's Link to Economics, General Accounting and Decision Making

In order to truly grasp the concept of Financial Accounting, it is necessary to recognize and the relationship Financial Accounting share with accounting and economics.

Accounting is a valuable and necessary cog in the gears of economics; accounting provides the information or data that is necessary to conduct the financial analysis and use of economic tools at an organizations disposal. Accounting utilizes various modes of financial communication to inform its users of financial data. This information may be in the form of accounting tools such as balance sheets, statements of cash flows, income statements and many others. This information is used by the likes of corporate financial officers, stockbroker, financial analyst, and many other financial professionals more. They will use this important information to help guide their organization to profitability ands sound financial practices. These professionals must use and interrupt the data to perform tasks suck as allocation of the firms financial resources and ultimately to help the organization maximize its profits and return on investments. Furthermore, the concepts of financial accounting are vital to bridging the economic theories of economics with the raw data of accounting (Block & Hint Ch.1).