Financial Accounting Basics – A primer on the three major components of accounting!

Financial markets are the marketplaces where investors trade securities based on their future potential value. Financial markets include financial markets such as corporate bonds, mutual funds, individual stocks, mortgage-backed securities (commonly referred to as mortgages), insurance, and a variety of international markets. The word “financial” comes from the Greek word “fiscus”, which means “money”. Financial markets are the largest and most liquid marketplaces in the world. It accounts for about 80 percent of global trading activity.

The basic function of financial markets is the allocation of capital between different objectives. Financial markets also provide information needed by other market participants to determine investment strategy, monitor the performance of financial portfolios, and make investment decisions. While most of these activities are typically carried out by large banks, they are also used by investors, both corporations and individuals, for purchasing and selling mutual funds, creating various accounts, borrowing money, securing loans and receiving payments, etc.

The three main categories of financial reporting are the balance sheet, income statement, and statement of cash flows. All three provide the financial information necessary to assess and analyze the health of the company. All of these reports include information that can affect the value of the company. Companies’ balance sheet, in particular, provides information to management concerning current assets, current liabilities, and expected future profits and losses.

A cash flow statement, which includes the balance sheet, income statement, and cash flow statement, is the first in a financial analysis of the company. This represents a company’s most recent period of operation. The statement shows how revenue earned and expenditures were collected. It also shows if the company had any special or one-time expenses during the period of time. All of these items are reflected in the company’s net income.

Income statement, which is the second part of a financial statement, represents an income statement that summarizes the company’s net income. It includes all of the company’s income categories, and their balances. Also included are all of the company’s revenue sources. The companies’ profit and loss margin are the third parts of this statement. All of the financial statements will be consistent with generally accepted accounting principles (GAAP). Many individuals do not have knowledge of all the terms used in GAAP, therefore it is recommended that they receive training on financial accounting.

There are specific accounting standards that must be followed when creating financial statements. Most professional financial organizations will have specific standards that must be followed. The accounting methods that are used will depend on the type of financial statements that are being created. All financial statements will be consistent with generally accepted accounting principles (GAAP).