Simplify Corporate Financial Accounting

Growing as toddlers, many of us found ourselves in a carrier study-line that we have no idea where is taking us to. Not necessarily being guided and counselled, or even having passion over. Somehow, I found myself during my secondary school time battling with accounting terminologies under bookkeeping subject. Meanwhile we had career aspirations we learned during our primary school time stuck in our head, on what we want to become after school. Without proper guidance, I could still recall that I wanted to become an engineer.
Bookkeeping and accounting as a subject started to produce different language, words that didn’t sounded like English, words that were not familiar at all. Today one would hear Debit, credit, Ledger, trial balance, and tomorrow you would be hearing words like assets, liabilities, capital, debtors, creditors etc. By day, those words were increasing and sticking in our heads. Hence, that’s how we grow learning.
Moreover, Financial accounting keeps reflecting throughout my life from university, Professional classes, and even at work. Despite all effort to grow-away from the discipline.
Here we are again with Prof Akintola Owolabi of LBS, who takes his time to ensure everybody is carried along. You can see the expression of joy from my classmates, especially those from different background or profession. Indeed, I relax my head to allow new things in.
Prof started from scratch where he digested accounting equation; Assets = Liabilities + Owners Equity. Of course, the equation is much familiar to me, but I like the fact that he is able to be linking all transactions in a given example to this equation consistently.
Actually, Corporate Financial Accounting can seem like a complicated topic, but it doesn’t have to be. By simplifying the concepts and breaking them down into more manageable pieces, it’s possible to understand this important aspect of business finance. Prof has already explored some of the key components of corporate financial accounting and how they work together to give a complete picture of a company’s financial health.
Meaning of Corporate Financial Accounting?
Corporate Financial Accounting is the process of recording, summarizing, and reporting a company’s financial transactions. This includes everything from paying bills and collecting payments to creating financial statements and reports for investors, regulators, and other stakeholders. The purpose of financial accounting is to provide accurate and timely information about a company’s financial performance and position for decision making.
Key Components of Corporate Financial Accounting
There are several key components of corporate financial accounting that are important to understand. These include:

1. The Accounting Equation – The accounting equation is the foundation of financial accounting. It states that Assets = Liabilities + Equity. This means that a company’s assets (such as cash, inventory, and property) must equal its liabilities (such as loans and accounts payable) plus its equity (such as stockholder investments and retained earnings). The accounting equation is used to create balance sheets, which provide a snapshot of a company’s financial position at a given point in time.
2. Financial Statements – Financial statements are reports that summarize a company’s financial performance and position. The three main financial statements are the balance sheet, income statement, and cash flow statement. The balance sheet shows a company’s assets, liabilities, and equity at a specific point in time. The income statement shows a company’s revenue, expenses, and net income over a period (usually a year). The cash flow statement shows how cash flows in and out of a company over a period of time.
3. Generally Accepted Accounting Principles (GAAP) – GAAP is a set of accounting standards and guidelines that companies must follow when preparing financial statements. GAAP ensures that financial statements are consistent, comparable, and reliable, making it easier for investors and other stakeholders to understand a company’s financial performance.
   He, however, we discussed on cash-basis and accrual basis accounting method. He let us understand that the major difference between the two is timing. That is time different assumption that divide the economic life of the business into artificial time periods. Accrual basis accounting which requires revenue and expense are recognize in the period in which they occur. Thereby necessitated the adjusting entries in order to match revenue and expenses that were earned and incurred in the same period.

Conclusion
Corporate Financial Accounting may seem complex, but by understanding the key components and how they work together, it becomes more manageable. The accounting equation provides a foundation for financial accounting. Financial statements provide a summary of a company’s financial performance and position, and GAAP ensures consistency and reliability in financial reporting. By mastering these concepts, businesses managers can gain a better understanding of their financial health and make more informed decisions.