The extensive meaning of financial accounting cannot be underestimated because it keeps every financial company going. Finance is the hub of every commercial organization, and the exact target of every manager is to maintain a financially stable and profit driven establishment.  Financial instability can pose huge threats such as departure of staff, poor sales and productivity, unbalanced and insufficient purchase of equipments and facilities. Financial accounting can exist in large and small scope and is completely dependent on the nature of the organization involved.

Finance is all about the monetary support of an enterprise as well the monetary resource and affairs of a body. Finance and accounting are interwoven though it can be dealt with separately. There’s no credible finance without proper statements, accounts and records.

Financial accounting has numerous benefits and few of which includes:

• Getting a comprehensive laydown of financial activities that helps in effective management. Show me an organized country, school or government parastatal with a solid financial background, I’ll show a perfect financial manager and accountant.  It serves the root and stronghold of any gathering or organization involving money.
• The statutory Limit or achievement can sometimes be measured with level of financial management and prowess. When financial documentation takes the standard procedure, it aids the easy trace of errors and omissions, thereby keeping it rolling on a favourable pace.

Severally, there’s always a misconception of this term owing to the fact that every business, small and large scale involves money. The process and record procedures adopted by these business are practically different and far from each other. There are always measurable and acceptable standards in financial accounting. Once these standards are maintained, the management of any business will be on the easy side.

Any monetary interpretatIon of any business or activity and the financial result of such activity during a period can be attributed to financial management and accounts.

There are several steps in monetary accounting, they are stated below:

Transaction analysis

Here, there’s mostly a general overview of the whole transactions made and understanding the arithmetic involved. A thorough examination of each transaction will be made to identify where the entry belongs. Both internal and external transactions here are measurable and gives you strong basis for correct recording.

Transaction Record

It’s crucial to write down all the understood transactions overviews for record use and future purposes. Ensure to appropriate all entries into the right journal to avoid error and mix up. The entries will move into a trial balance.

Transfer of transaction record

One can move these records from journal to a ledger, making a proper and concise documentation. Information recorded in the ledger will be used for the company’s financial statements.

Formulating an unadjusted trial balance

Unadjusted trial balance is usually a list of company’s Balances and account at a given duration.

Prepare entries

Entries are recorded at the end of accounting period to amend  the final balance.

Prepare an adjusted trial balance

There’s a preparation of another trial balance from ledger and accounts after the journalizing and posting of trial balance has been completed.

Create a financial statement

It’s one of the last phase, it’s the preparation of financial statement- a company’s financial status, outcome and cashflow.

Closing entry

Balance from the and of a given year will become the basis of the next fiscal year.