![]() In the US, companies follow the guidelines of GAAP GAAP GAAP (Generally Accepted Accounting Principles) are standardized guidelines for accounting and financial reporting. The regulatory bodies have stated some basic principles to standardize the process. It aids investors in analyzing the company's performance. It is measured using specific ratios such as gross profit margin, EBITDA, and net profit margin. It is carried out to gauge corporate performance and profitability Profitability Profitability refers to a company's ability to generate revenue and maximize profit above its expenditure and operational costs. read more and interpretation of transactions. These transactions include purchases, sales, receipts, and payments. Financial accounting is governed and regulated by the Generally Accepted Accounting Principles (GAAP) in the US.įinancial accounting is simply the bookkeeping Bookkeeping Bookkeeping is the day-to-day documentation of a company’s financial transactions.The data is used accordingly by managers, shareholders, creditors, lenders, and investors. This information serves as the basis for many critical decisions.It represents revenue, expenses, assets, liabilities, and equity in respective financial statements, i.e., income statements, cash flow statements, and balance sheets.The profitability and financial position of a firm are ascertained. Financial accounting includes bookkeeping, classification, and interpretation of business transactions. ![]()
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