Introduction to Financial Accounting information

May 1, 2010 by admin

Financial accounting refers to information describing the financial resources, obligation, and activities of an economic entity (either an organisation or individual). Accountants use the terms financial position to describe an entity’s financial resources and obligation at one point in time and the term results of operations to describe its financial activities during the year.

Financial accounting information is design primarily to assist investors and creditors in deciding where to place their scarce investment resources. Such desicion are important to society , as they determine which companies and industries will receive the financial resources necessarily for growth and which will not.

It also be used by managers and in income tax returns. In fact, financial accounting information is used for so many different purpose that it often is called”general purpose” accounting information.