Financial accounting is the part of accounting that systematically records, documents, and analyses all of a company's business transactions. It forms the basis for annual financial statements and tax analyses.
Basics
Business transactions are recorded chronologically and factually organised. The basis for this is documentation such as invoices, bank statements, or till receipts.
The aim is the complete and comprehensible presentation of assets, liabilities, equity, revenues and expenses.
Legal framework
Financial accounting is subject to legal regulations, particularly commercial law rules (e.g. HGB) as well as tax law documentation requirements. The principles of proper accounting and the GoBD are also decisive.
Structure in accounting
Financial accounting is part of external accounting. It stands alongside other areas such as cost and performance accounting or Payroll accounting.
Typical components
- Accounting and booking of documents
- Management of accounts receivable and accounts payable
- Reconciliation of bank, debtor and creditor accounts
- Creation of analyses such as P&L accounts or trial balances
Typical workflows
- Document verification
- Account assignment
- Booking
- Content alignment
- Evaluation
Practical relevance
Proper financial accounting creates transparency regarding a company's economic situation and serves as the basis for tax processes and closing procedures.
Typical sources of error
- Incomplete document capture
- Incorrect accounting classification
- Missing account reconciliation
- Insufficient documentation
FAQ
What is financial accounting?
The systematic recording and documentation of all business transactions of a company.
Is financial accounting legally required?
Companies are obliged to properly document their business transactions.
What is it for?
It forms the basis for analyses, annual financial statements, and tax processes.
Conclusion
Financial accounting is a central component of management accounting. It documents business transactions in a structured and comprehensible manner and forms the basis for closing and tax processes.
Brasser Accounting Solutions GmbH is a specialised accounting service provider and part of a corporate group with Quint GmbH (tax consultancy/auditing) and Service Place Årjäng AB (Swedish tax office). BAS exclusively performs services according to § 6 No. 3 and 4 StBerG and does not provide tax or legal advice.
