Financial Accounting Lecture for B.Com Second Semester

Introduction
Financial Accounting is a branch of accounting that deals with the preparation of financial statements of an organization. It is the process of identifying, measuring, recording, and communicating financial information to various stakeholders. This lecture is designed to provide an overview of Financial Accounting, its principles, and practices.

Principles of Financial Accounting
The principles of Financial Accounting are generally accepted accounting principles (GAAP). The GAAP principles provide a framework for preparing financial statements that are reliable, relevant, and comparable. The principles include:

1. Monetary Unit Principle: This principle assumes that the currency used in financial statements is stable and reliable.

2. Entity Principle: This principle requires that financial statements be prepared for each separate legal entity.

3. Time Period Principle: This principle requires that financial statements be prepared for a specific period of time, usually one year.

4. Cost Principle: This principle requires that assets be recorded at their historical cost.

5. Matching Principle: This principle requires that expenses be matched with revenues in the period they are earned.

Financial Statements
The financial statements are the end product of Financial Accounting. The financial statements include:

1. Balance Sheet: This statement shows the financial position of an organization at a specific point in time.

2. Income Statement: This statement shows the revenues and expenses of an organization over a specific period of time.

3. Cash Flow Statement: This statement shows the inflow and outflow of cash over a specific period of time.

Conclusion
Financial Accounting is a critical aspect of business operations. The principles and practices of Financial Accounting ensure that financial statements are reliable, relevant, and comparable. The financial statements provide information to various stakeholders, including investors, creditors, and regulatory agencies.