What is Involved in Advanced Financial Accounting?

D. Nelson

Accounting involves the keeping, recording, and analysis of financial data. In the business world, accounting is used to allow professionals to make sensible financial and economic decisions. Whereas managerial accounting is the practice of making such decisions from within a business or organization, financial accounting is used to prepare statements and documents to show to auditors, clients, lawyers, and other parties that may have interest in an organization's financial status. Advanced financial accounting includes a deeper exploration of and extension to the basics of financial accounting.

Courses in advanced financial accounting aim to give students a deeper understanding of the basic accounting principles.
Courses in advanced financial accounting aim to give students a deeper understanding of the basic accounting principles.

Advanced financial accounting often includes case studies that are related to contemporary issues and obstacles faced by practicing accountants. Students who are learning advanced financial accounting may also be required to know and understand the implications of changes in the principles of accounting. Current problems that are faced during auditing procedures are also explored.

Another component of advanced financial accounting is the gathering of documents that make up consolidated financial statements. These statements are necessary for the proper financial analysis of parent companies that have numerous subsidiaries. A company has subsidiaries when it owns a significant number of shares in different companies. The consolidated financial statements allow financial accountants and other financial analysts to observe the overall state of a company that has a number of different entities.

Advanced financial accounting also includes a deeper understanding of the auditing procedure. Students of this kind of financial accounting are often expected to learn procedures related to the detection of fraud by an auditor. Also important is an understanding of the role and independence of the financial auditor.

This study of accounting may also include a more complex exploration of capital structures. Capital structures refer to whichever methods an organization uses to fund its expansions, as well as its day to day operations. The term can refer to long-term investments, such as equipment, stocks, and real estate. It may also refer to short-term investments or current investments, such as tangible cash and products that are for sale.

As a discipline, advanced financial accounting grows from the roots of the basics of accounting, so many who study this branch of accounting already have a strong background in the field. In order to learn advanced financial accounting, it may be necessary to first learn about the principles, ethics, and expectations of accountants. Likewise, it may also be necessary to learn the basics of bookkeeping and financial analysis that beginning accountants are expected to understand.

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