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Public accounting definition

Corporate budget and its components

Companies and institutions, both in the public and private sectors, depend on the accounting system. Within each company, there is a department specialized in accounting and financial work, due to its importance in supporting decision-making as it is a business language by helping the company’s public administration collect data and accounting information, and conduct financial operations. And the accounting related to the company’s balance sheet. Therefore, public accounting is considered one of the most important areas and processes on which companies are based as an essential component of their components. In this article, the definition of public accounting will be addressed.

Public accounting definition

Public accounting is defined as a set of tasks and procedures that are represented in recording financial transactions related to sorting and financial warehousing operations, in addition to preparing various financial reports and analyzes. And assets and liabilities, the balance sheet and cash flows, and there is in accounting the so-called science of auditing, which is the audit of the financial statements of companies and institutions in addition to the preparation of financial reports, and one of the most important elements of the definition of public accounting is the planning element, which includes financial planning related to income tax, companies and institutions, and planning Personal finance.

Public accounting definition
Public accounting definition

Public accounting is the systematic recording of financial commercial transactions, and it is represented in a set of systems that help in keeping financial records, and track transactions within this record-keeping system, and then collect the resulting financial information, which contributes to the output of a set of financial reports, and reveals the company’s financial position in The end of the financial period, in accordance with a set of international standards specialized in preparing financial reports, which impose a specific method for commercial financial transactions in the accounting records and compiling them in the financial statements, so that the result at the end of the accounting period is a set of lists represented in the income statement, balance sheet and statement of cash flows.

Types of public accounting

The science of public accounting is divided into a group of types, each of which is represented by information and foundations that depend in its content on a set of accounting concepts and rules, through which public accounting is defined in its full form, and the following is a detail of the types of public accounting:

Financial Accounting

Financial accounting is defined as the process of recording and summarizing in addition to reporting a number of financial transactions resulting from a group of business operations over a period of time, where these business transactions are summarized in the preparation of financial statements including the balance sheet, income statement, and cash flow statement Through these transactions, the company’s operational performance is recorded and evaluated during a specified period, and annual financial reports are prepared through the financial statements that were mentioned. These financial statements display the main elements through which financial reports are prepared, which are revenues, liabilities, assets and cash expenditures. Income statement and equity.

accounting administration

Management accounting is defined as the process of preparing management and accounts reports, which provides accurate and timely financial and statistical information, as it is requested by managers to make short-term daily decisions, and unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting creates reports Monthly or weekly for internal company employees and departments such as the managing director and CEO.

Cost accounting

Cost accounting is defined as an accounting method in which all costs incurred in carrying out an activity or achieving a financial purpose are collected, classified and recorded, and then these costs are summarized and analyzed to reach the selling price, where cost accounting considers money as the main economic factor of production.

General Accounting Principles

Accounting principles are a set of rules and procedures that define a basis for public accounting practices. Compliance with accounting principles helps ensure the transparency of financial reports. These principles are as follows:
  • General accounting principles relate to all of an entity's financial affairs, including assets, liabilities, stockholders' equity, revenue, and expenses, and include revenue recognition, classification of assets, permissible methods of depreciation, and measurement of outstanding debts.
  • The General Accounting Principles were developed by the American Institute of Certified Public Accountants. They define ways to identify, measure and present economic events, and external entities such as banks, investors, and regulators rely on them to provide true and accurate information about the financial entity, because they ensure transparency in financial reporting.
  • Accounting standards are concerned with helping the accountant to abide by all the rules and regulations included in them. Also, all accountants must apply the same standards during the financial reporting process, in order to prevent errors or inconsistencies, and they must fully disclose in the event of any changes in standards during the financial period.
  • One of the important principles in general accounting standards is the principle of honesty. The accountant must provide a complete and accurate perception of the financial position of the facility, and that all procedures used in preparing financial reports follow the same method.
  • According to these standards, the accountant must provide a full explanation of all the pros and cons, and all accountants must strive to achieve full disclosure in the financial reports.
  • Assets are valued on the basis of continuity, in other words not assuming that the financial institution stops its investment business.
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