Knowra Financial accounting Financial accounting Financial accounting records an organization’s transactions and reports its financial performance and position to external users through standardized financial statements.
Double-entry bookkeeping : A bookkeeping system that records each transaction with equal debit and credit entries. It provides the recording structure from which financial statements are prepared.
Journal entry : A dated record of a transaction showing the accounts debited and credited. It is the basic record that starts the reporting trail.
Balance sheet : A financial statement showing an entity’s assets, liabilities, and equity at a specific date. It reports the financial position that accounting records have accumulated.
Management accounting : The use of accounting information to support internal planning, control, and decision-making. Unlike financial accounting, it is designed chiefly for managers rather than external users.
Accounting standards : Authoritative rules and principles that govern how financial information is recognized, measured, presented, and disclosed. They constrain the methods financial accountants use to produce comparable reports.
Accrual accounting : An accounting method that recognizes revenues when earned and expenses when incurred, rather than when cash changes hands. It determines when reported performance differs from cash receipts and payments.
Trial balance : A list of ledger account balances used to check whether total debits equal total credits. It helps identify bookkeeping imbalances before statements are assembled.
Income statement : A financial statement summarizing revenues, expenses, and profit or loss over a period. It shows how the organization’s reported performance is calculated.
Cash basis accounting : An accounting method that records revenue and expenses when cash is received or paid. It contrasts with accrual reporting, which recognizes activity beyond cash timing.
Financial disclosure : The release of material financial information by an organization to stakeholders or the public. Financial statements are a central channel for these disclosures.
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