Financial accounts are a major branch of accounting that involves the collection, recording and extraction (overall preparation) of financial statements. These are for external decision makers, such as suppliers, stockholders and banks. In other words, it describes the performance of a business over a specific period, as well as the state of affairs at the end of that period. This is usually referred to as a “trading period”.
All financial information must be summarised in the form of a periodic profit and loss account, a balance sheet and a cash flow statement. This must be in accordance with professional, legal, and capital market requirements.
Financial accounts concentrate on the business as a whole rather than analysing the component parts of the business, and most financial accounting information is of monetary nature.
Types of Financial Accounts:
Expense accounts are plans under which companies compensate employees for business-related expenses. These include travel costs, entertainment, gifts , and other expenses related to the employer’s business activity.
Of particular interest to businesses and their employees is the tax treatment of business-related expenses, the types of expenses for which employees will be repaid, and the manner in which those repayments are made.