There are various classes of accounting but opinion has had it that financial accounting takes prominence over the other classes of accounting. The reasons are simple.
1. It is only financial accounting that will disclose the value or net worth of a business entity by way of financial reports.
2. It is only financial accounting that gives information about the amount the business entity owes to people it transacts business with. These are called the liabilities of the business entity.
3. Financial accounting also gives information about the amount of money the business entity is owed. These are the debts payable by third parties to the business, and they are described as debtors in the financial statements.
4. And lastly, only financial accounting gives information about the profit made by the business or losses incurred by it during the operating period. This is true because financial accounting requires that cost incurred in running a business be matched with the revenue generated in that period to determine the profit or loss position of the business.
1. It is only financial accounting that will disclose the value or net worth of a business entity by way of financial reports.
2. It is only financial accounting that gives information about the amount the business entity owes to people it transacts business with. These are called the liabilities of the business entity.
3. Financial accounting also gives information about the amount of money the business entity is owed. These are the debts payable by third parties to the business, and they are described as debtors in the financial statements.
4. And lastly, only financial accounting gives information about the profit made by the business or losses incurred by it during the operating period. This is true because financial accounting requires that cost incurred in running a business be matched with the revenue generated in that period to determine the profit or loss position of the business.
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