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Diving Deeper: Concepts, Conventions & Conditions

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Overview To understand the financials of a business, there is a uniform system of accounting known as Generally Accepted Accounting Principles (GAAP) provided by the Financial Accounting Standards Board (FASB). Under that, there are several accounting concepts & principles which we will be exploring in this article. Scope: This article will be covering: Accounting principles Accounting concepts Accounting conventions Imagine a situation where every business entity presents its financials in a format which is only suitable to them. These personalized accounting systems worked reasonably well in the case of sole proprietorship and partner firms. However, in the current corporate environment where several stakeholders are involved, it is impossible to understand or compare the company financials to derive meaningful conclusions from varied accounting systems. Therefore, financial accountants work based on a unified and standardized system of accounting to facilitate the understan...
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Introduction to Financial Accounting

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Overview Accounting - the language of business, is the process of sharing, measuring & processing any business entity’s financial information. The information is presented in a particular format and used by several stakeholders for decision-making. It further has 3 branches under it: Usually financial in nature Presented in a particular format Used by several stakeholders for decision making Scope: To understand the basics of accounting What is Accounting? Different branches of Accounting How accounting helps in the decision-making process? This accounting information is used differently by different stakeholders to make crucial decisions regarding the evaluation of assets, estimation of risk involved, and calculation of the profitability of important investment decisions. Accounting Accounting is the process of measuring, recording, summarising & communicating the financial transactions of any business entity. The information is usually presented in a particular format and u...
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