If you have recently been accepted into any institution for an accounting course, chances are that one of the very first courses you will have to take is on financial accounting. The term ‘financial accounting’ sounds very impressive, but it gives no clues on what it is all about. And it is from such a background that you could find yourself getting online, and looking for information as to what financial accounting is all about. It is exactly that type of information that we now proceed to give you. That we do not by simply telling you what financial accounting is (different authorities posit different definitions); but by going with you on a journey in which we will explore some of the things you will be studying in the financial accounting module.
Now one of the things you will definitely be learning in financial-accounting is the double-entry accounting concept. This can be confusing at first, but you will soon get a hang of it, and actually get to love it, because it feels like a game once you understand the rules. In this area, you will be taught about the idea of a ‘credit’ and ‘debit’ in accounting, and you will come to learn that in the accounting system, every transaction generates a debit (or a set of debits) in some account(s), and that every transaction also generates a credit (or a series of credits) in some account(s). It seems complex when explained in this way, but when your instructors show you by way of example, you will find it all very easy.
To help you make sense of double-entry accounting, the second thing you will be taught in financial accounting is the accounting equation. It is an equation that is accepted globally, and it simply says that the total value of an entity’s assets is equal to the total amount of the same organizations capital plus liabilities. If you are still unfamiliar with these things, you will be taught what an asset is, what a liability is, and what capital, in the accounting context, refers to.
The third thing you will definitely be taught in financial-accounting is cash-flow management. This will start with an introduction into the workings of the cash-book, before proceeding deeper into the mechanics that go into control of the money that gets into an organization’s tills, and money that gets out of the same tills.
The fourth thing that you will definitely be taught, in financial accounting, is that which is ‘accounting for expenses’ and it is here that you will be introduced into what is referred to as the petty cash book – which is quite distinct from the organization’s main cash book.
In a modern financial-accounting course, you will also get to learn something about the computerization of accounts. The whole accounting course will have a distinct module on this, of course, but many curriculum planners find it necessary to give students in financial accounting ideas on how the various ‘books’ they have been studying about can be computerized. How the various accounts that students encounter in financial-accounting (from the balance sheet to the profit and loss account and onto the cash books we have talked about) can be presented in spreadsheets is explored here. A student will also be taught how to interact with the various accounting software programs, and how the concepts they will have learnt in financial accounting play out when applied in the accounting software.