I have often been asked a question whether one can learn accountancy without knowing any idea about business management. It is not surprising to see many people today wonder whether they can learn financial accounting without having any basic idea of how to run a business. They often wonder as to what are the accounting principles? Will I be able to understand them since I do not have any idea about running a business? Will they help me in any other way? These and many other questions are known to arise in the minds of people. The fact is that one can learn the various principles of financial accounting without having any knowledge about running a business or even being a part of it. Allow me to explain as to how this is possible.
Firstly, the practice and principles of accountancy are not directly dependent upon a business but are an independent function of the business. This means that accountancy is not dependent upon the business to be understood. Interestingly, a business on the other hand will not be able to function without accountancy. Here is some more information about the science of financial accountancy.
What is Financial Accounting?
In layman terms, financial accounting is a systematic method of preparing financial statements pertaining to an organization. It helps in getting an idea about the financial health of the organization and its profit & loss figures. These figures are known to be important to the owners of the organization and others in the top management, the stakeholders of the firm, its suppliers and buyers and even the financial institutions that may have stakes in the firm.
The basic function of any financial accounting statement is to give its viewers an idea about which expenses can be curtailed in order to increase the incomes and in turn, the overall profits while at the same time curtailing the losses made. This statement is made in a very simplistic manner; by calculating the difference between the total expenses from the…