Main Functions of Accounting
Accounting / Posted 2 months ago by Noah Smith / 33 views
Summarizing Data
What it is: Consolidating the classified ledger data into the final, comprehensive financial reports.
Method: Preparing the Trial Balance and subsequently the three main Financial Statements: the Balance Sheet, the Income Statement, and the Statement of Cash Flows.
Purpose: To communicate the company’s financial position and performance for a specific period to stakeholders. Accounting Services in Cleveland.
Analyzing and Interpreting Results
What it is: Evaluating the summarized financial statements to draw meaningful conclusions about the business’s performance and financial stability.
Method: Using tools like ratio analysis (e.g., liquidity, profitability, and solvency ratios) to assess trends and compare the company’s performance against industry standards or prior periods.
Purpose: To provide insights that help internal management and external investors make informed decisions.
Communicating Information
What it is: Presenting the analyzed financial data and interpretations to the relevant users.
Recipients: External users (investors, creditors, regulators) receive highly standardized financial statements, while Internal users (managers, executives) receive customized reports, budgets, and forecasts.
Purpose: To provide the basis for economic decision-making, fulfilling the ultimate goal of the entire accounting process.
- Listing ID: 66966
- Country: USA
- City: Cleveland