Financial accounting practical

All of the financial statements for publicly traded companies are created and reported according to the financial accounting standards set forth by the Financial Accounting Standard Board FASB.

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This information is critical in determining liquidity, solvency and the future viability of the business continuing operations. By providing data through a variety of statements including the balance sheet and income statement, a company can give investors and lenders more power in their decision-making.

It is the process in which the company records and reports all the financial data that go in and out of its business operations. The accounting department creates a balance sheet which provides the financial position of the company at a given time. Compare Investment Accounts.

Used for managerial accounting as well, cash flow statements examined over a period of time can generate a history of cash fluctuations.

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This information is critical in determining liquidity, solvency and the future viability of the business continuing operations. Private companies perform the same procedures but they do not publish the outcome. However, using financial accounting, the accounting department, has the ability to create cash flow statements. The income statement is also called the profit and loss statement. The accounting department creates a balance sheet which provides the financial position of the company at a given time. Public companies are required to report their results to the public while private companies report to their owners. Even for privately-owned businesses that do not necessarily follow the requirements of the FASB, no lending institution assumes the liability of a large business loan without critical information provided by financial accounting techniques.

Balance Sheet Financial accounting is also used to determine a companies financial position for a specific period in time.

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