Financial Accounting as an Accounting Solution?
Financial accounting is an accounting solution that undertakes the work of recording, synthesizing data, and building financial statements to serve those who need to use accounting information. Information on the status and fluctuations of capital, assets, or physical and monetary flows will be synthesized by a financial accounting team based on data.
The finance and accounting team will include general accounting and data accounting, with a clear and transparent division of work to ensure work efficiency, specifically:
- General accounting: Collect and process general information about the economic and financial situation of the unit. Through monetary units, general accounting provides data reflecting the use of assets and sources of asset formation of the enterprise.
- Detailed accounting: Collect and process information according to a specific object on each unit. In detailed accounting, accountants must ensure accuracy to avoid affecting when resuming the data.
Financial Accounting for Businesses
A financial accountant is one of the positions that play an important role in the business, supporting businesses to perform tasks such as:
- Provides information for those who need to use accounting information such as business leaders, external partners. Therefore, all financial accounting data provided should ensure accuracy, objectivity, and compliance with accounting principles and standards, which is the basis for managers to make appropriate and timely business decisions.
- The information provided by a financial accountant is information about financial-accounting activities that have arisen, of a general nature, expressed in the form of value. Therefore, businesses can regularly monitor the status of their production and business activities.
- Makes general financial statements about the business’ performance results of in the reporting period, including clear financial results and effective cost management that help businesses optimize costs and cut unnecessary expenses.
- Manages risk and insurance for businesses when there are financial fluctuations.
- Supports business leaders to regulate the financial situation of the business. The information from the financial accountant is also a legal basis to help businesses clearly resolve complaints, disputes, bank loans and investments.
Important Principles to Remember
Financial accounting should comply with the general corporate accounting rules. For instance:
- Assets and liabilities are initially recognized at cost
- Consistently apply the selected accounting regulations and methods in each annual accounting period. If there is a change in the method, the accountant should make a detailed explanation in the financial statements
- To reflect in an objective, factual, complete, and correct manner in the accounting period in which economic, financial, and accounting operations arise.
- For the preparation and submission of financial statements, accountants must do so accurately and submit them on time. The information and data in the financial statements of the enterprise should be disclosed according to the provisions of Articles 31 and 32 of the Law on Accounting.
- Accountants evaluate assets and allocate expenditures and receipts in a uniform, careful and accurate manner with no deviation.
- Preparation and presentation of financial statements must reflect the true nature of each transaction rather than its appearance
Financial accountants need to make monthly, quarterly, and annual reports such as:
- Monthly report: Provide VAT report, PIT report
- Quarterly reports: Provide VAT reports, PIT reports, reports on the use of invoices
- Annual report: Financial report, PIT finalization, CIT finalization, license tax
- Accounting book:
- General diary
- General ledger
- Receivable and payable report
- Consolidate inventory report
- Management of cash receipts and deposits
- Management of raw materials, goods, finished products
- Manage business revenue and expenses
In addition, a financial accountant also performs other tasks such as announcing the issuance of invoices, checking payment papers, etc.
Management Accounting vs Financial Accounting
|Content||Management Accounting||Financial Accounting|
|Purpose||Provide information to serve the management of production and business activities.||Provide information for the preparation of financial statements.|
|Target customer||Corporate managers (Board of Directors, Board of Directors).||Business managers and external entities (Investors, banks, tax authorities, financial authorities, statistical agencies).|
|Providing information principles||There is no obligation, managers are free to decide and adjust in accordance with the needs and management capabilities of the business.||Respect the generally accepted and used accounting principles. In other words, financial accounting must ensure consistency according to certain accounting principles and standards so that everyone has the same understanding of accounting principles. Accounting information, especially financial statements, and financial accounting must comply with the provisions of applicable laws, especially the requirements of financial management and the requirements of society through disclosure. mandatory data.|
|Information’s scopes||Related to the management on each department (workshop, department) to each relevant individual.||Involves financial management on an enterprise-wide scale.|
|Report timeline||Management accountants have more reporting periods: Quarter, year, month, week, day.||Financial accounting has a reporting period: Quarterly, annually.|
|Information features||Emphasize the relevance and flexibility of data, information is aggregated from many different angles.||Reflect past information that is objective and verifiable.|
|Statutory Compulsory||Management accounting is not mandatory.||Financial accounting is required by law. It means that the books and reports of financial accounting in all enterprises must be unified.|
For small businesses and micro-enterprises to set up a complete and effective accounting system is quite difficult because of resource and cost constraints. Therefore, choosing an accounting service provider is currently the optimal solution for businesses today. Enterprises do not need to spend too much on paying staff salaries, office rental costs, or recruiting full accounting positions such as financial accountant, chief accountant, tax accountant, but still have a reporting system of reports and books in accordance with regulations.
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