Financial accounting is the process of recording, summarizing and reporting the myriad of transactions resulting from business operations over a period of time.
Financial Accounting Reporting
Financial reporting occurs through the use of financial statements. The financial statements present the five main classifications of financial data: revenues, expenses, assets, liabilities and equity. Revenues and expenses are accounted for and reported on the income statement. Financial accounting results in the determination of net income at the bottom of the income statement. Assets, liabilities and equity accounts are reported on the balance sheet. The balance sheet utilizes financial accounting to report ownership of the company’s future economic benefits.