The essence of financial accounting

Whole, complete and continuous mapping of all business transactions for an accounting period, "Building the set of financial statements; interpretation and presentation of reliable financial information to users. To understand the functions of accounting, you must first find out the essence of the concept of "business transaction" and select the criterion by which it is subject to reflection in accounting. In accounting practice, more likely to use such a definition of business transaction. Business operation - an act or event which causes changes in the financial condition of the bank. Let us see what is understood by the business under financial condition? Financial condition or financial position, reflects the bank than the bank owns the (economic resources), and that he who should at this point in time. In the financial account of economic resources (assets) that are owned by the bank or the bank that controls it are treated as assets. Sources from which received resources, usually denoted as its liabilities and equity (debt). Liabilities indicate how much the bank has attracted funds from creditors, and capital - how much is invested in the bank, its founders. Analyzing the financial condition of the bank, we can conclude whether he is able to pay its creditors, and brought a banking profits. Financial condition can be expressed by the equation: Assets = Liabilities + Equity (own). This equation is known in accounting as a classical accounting or balance sheet, of the equation. Topic: The role of accounting in the management of the bank, its types and purpose | Tags: Financial Accounting