Financial Accounting Software – Sector of Business Accounting

Do you want to improve your company's financial management? Do not know what tool can help you?

Financial accounting software is a great solution specially designed to help companies cover all aspects of financial management and control.

Main purposes of financial accounting software:

• collecting financial transactions;
• recording financial transactions,
• summarizing financial transactions, and 
• representing financial transactions in financial statements and reports.

This processes accurately reflect the company's business activity, helps to satisfy the laws' requirements and represents financial reports to business owners, enables performing improved analysis of business activity, and contributes to efficient resource allocation.

Financial accounting software generates four external financial statements that cover a specific period such as a month, quarter, or year:

• Income Statement (Profit and Loss statement) – a financial statement that reports the company's performance (revenues, expenses, gains, and losses) over a specific accounting period. 
• Statement of Cash Flows (on an income statement: Revenues - Expenses = Net Income) – a financial report that shows the change (operating activities, investing activities, and financing activities) in the Cash account during an accounting period. 
• Balance Sheet (on a balance sheet: Assets = Liabilities + Stockholders’ Equity) – a financial statement that summarizes the company's assets, liabilities, and shareholders' equity on the last day of an accounting period. 
• Statement of Stockholders' Equity  (statement of retained earnings) – a financial statement that reports changes in all major equity accounts during an accounting period.

Financial reports are a broader concept than financial statements. Companies use financial statements to show outside the company their financial performance, for example, to creditors, investors, suppliers, and customers. Creating external statements and reports is one of the essential distinctions of financial accounting software from managerial accounting software which is designed to prepare detailed reports and forecasts for the company's managers working inside the company.

In addition to financial statements, financial accounting software is designed to create:

• The company's annual report to stockholders 
• The company's annual report to the Securities and Exchange Commission (Form 10-K)
• The proxy statement, and other financial information

Software providers study in detail the legal requirements and financial accounting standards established by both the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to meet the US internal and external financial accounting and reporting standards.

Benefits of using the financial accounting software:

• Efficiently managing the planning, budgeting, projects, and other processes. 
• Automating the process of generating external financial statements and reports. 
• Continuous managing and monitoring of cash flow. 
• Avoid errors that can be evolved from the manual data entry.
• Performing real-time financial analysis. 
• Consistently providing impeccable financial information.