Remote Learning Options for Coders

The best-known type of hospital is the general hospital, also known as an acute-care hospital. These facilities handle many kinds of disease and injury, and normally have an emergency department (sometimes known as "accident & emergency") or trauma center to deal with immediate and urgent threats to health. Larger cities may have several hospitals of varying sizes and facilities. Some hospitals, especially in the United States and Canada, have their own ambulance service.

A district hospital typically is the major health care facility in its region, with large numbers of beds for intensive care, critical care, and long-term care.

In California, "district hospital" refers specifically to a class of healthcare facility created shortly after World War II to address a shortage of hospital beds in many local communities.^[6][7] Even today, district hospitals are the sole public hospitals in 19 of California's counties,^[6] and are the sole locally accessible hospital within nine additional counties in which one or more other hospitals are present at a substantial distance from a local community.^[6] Twenty-eight of California's rural hospitals and 20 of its critical-access hospitals are district hospitals.^[7] They are formed by local municipalities, have boards that are individually elected by their local communities, and exist to serve local needs.^[6][7] They are a particularly important provider of healthcare to uninsured patients and patients with Medi-Cal (which is California's Medicaid program, serving low-income persons, some senior citizens, persons with disabilities, children in foster care, and pregnant women).^[6][7] In 2012, district hospitals provided $54 million in uncompensated care in California.^[7]

A specialty hospital is primarily and exclusively dedicated to one or a few related medical specialties.^[8] Subtypes include rehabilitation hospitals, children's hospitals, seniors' (geriatric) hospitals, long-term acute care facilities, and hospitals for dealing with specific medical needs such as psychiatric problems (see psychiatric hospital), cancer treatment, certain disease categories such as cardiac, oncology, or orthopedic problems, and so forth.

In Germany, specialised hospitals are called Fachkrankenhaus; an example is Fachkrankenhaus Coswig (thoracic surgery). In India, specialty hospitals are known as super-specialty hospitals and are distinguished from multispecialty hospitals which are composed of several specialties.^{[citation needed]}

Specialised hospitals can help reduce health care costs compared to general hospitals. For example, Narayana Health's cardiac unit in Bangalore specialises in cardiac surgery and allows for a significantly greater number of patients. It has 3,000 beds and performs 3,000 paediatric cardiac operations annually, the largest number in the world for such a facility.^[2][9] Surgeons are paid on a fixed salary instead of per operation, thus when the number of procedures increases, the hospital is able to take advantage of economies of scale and reduce its cost per procedure.^[9] Each specialist may also become more efficient by working on one procedure like a production line.^[2]

A teaching hospital delivers healthcare to patients as well as training to prospective medical professionals such as medical students and student nurses. It may be linked to a medical school or nursing school, and may be involved in medical research. Students may also observe clinical work in the hospital.^[10]

Clinics generally provide only outpatient services, but some may have a few inpatient beds and a limited range of services that may otherwise be found in typical hospitals.

A hospital contains one or more wards that house hospital beds for inpatients. It may also have acute services such as an emergency department, operating theatre, and intensive care unit, as well as a range of medical specialty departments. A well-equipped hospital may be classified as a trauma center. They may also have other services such as a hospital pharmacy, radiology, pathology, and medical laboratories. Some hospitals have outpatient departments such as behavioral health services, dentistry, and rehabilitation services.

A hospital may also have a department of nursing, headed by a chief nursing officer or director of nursing. This department is responsible for the administration of professional nursing practice, research, and policy for the hospital.

Many units have both a nursing and a medical director that serve as administrators for their respective disciplines within that unit. For example, within an intensive care nursery, a medical director is responsible for physicians and medical care, while the nursing manager is responsible for all the nurses and nursing care.

Support units may include a medical records department, release of information department, technical support, clinical engineering, facilities management, plant operations, dining services, and security departments.

• 
  Hospital beds per 1000 people 2013^[11]
• 
  Hospital beds per inhabitants
• 
  Resuscitation room bed after a trauma intervention, showing the highly technical equipment of modern hospitals

The COVID-19 pandemic stimulated the development of virtual wards across the British NHS. Patients are managed at home, monitoring their own oxygen levels using an oxygen saturation probe if necessary and supported by telephone. West Hertfordshire Hospitals NHS Trust managed around 1200 patients at home between March and June 2020 and planned to continue the system after COVID-19, initially for respiratory patients.^[12] Mersey Care NHS Foundation Trust started a COVID Oximetry@Home service in April 2020. This enables them to monitor more than 5000 patients a day in their own homes. The technology allows nurses, carers, or patients to record and monitor vital signs such as blood oxygen levels.^[13]

In early India, Fa Xian, a Chinese Buddhist monk who travelled across India c. AD 400, recorded examples of healing institutions.^[14] According to the Mahavamsa, the ancient chronicle of Sinhalese royalty, written in the sixth century AD, King Pandukabhaya of Sri Lanka (r. 437–367 BC) had lying-in-homes and hospitals (Sivikasotthi-Sala).^[15] A hospital and medical training center also existed at Gundeshapur, a major city in southwest of the Sassanid Persian Empire founded in AD 271 by Shapur I.^[16] In ancient Greece, temples dedicated to the healer-god Asclepius, known as Asclepeion functioned as centers of medical advice, prognosis, and healing.^[17] The Asclepeia spread to the Roman Empire. While public healthcare was non-existent in the Roman Empire, military hospitals called valetudinaria did exist stationed in military barracks and would serve the soldiers and slaves within the fort.^[18] Evidence exists that some civilian hospitals, while unavailable to the Roman population, were occasionally privately built in extremely wealthy Roman households located in the countryside for that family, although this practice seems to have ended in 80 AD.^[19]

• 
  View of the Askleipion of Kos, the best preserved instance of an Asklepieion
• 
  Ruins of a two thousand-year-old hospital were discovered in the historical city of Anuradhapura Mihintale Sri Lanka.

The declaration of Christianity as an accepted religion in the Roman Empire drove an expansion of the provision of care.^[20] Following the First Council of Nicaea in AD 325 construction of a hospital in every cathedral town was begun, including among the earliest hospitals by Saint Sampson in Constantinople and by Basil, bishop of Caesarea in modern-day Turkey.^[21] By the twelfth century, Constantinople had two well-organised hospitals, staffed by doctors who were both male and female. Facilities included systematic treatment procedures and specialised wards for various diseases.^[22]

The earliest general hospital in the Islamic world was built in 805 in Baghdad by Harun Al-Rashid.^[23][24] By the 10th century, Baghdad had five more hospitals, while Damascus had six hospitals by the 15th century, and Córdoba alone had 50 major hospitals, many exclusively for the military, by the end of the 15th century.^[25] The Islamic bimaristan served as a center of medical treatment, as well nursing home and lunatic asylum. It typically treated the poor, as the rich would have been treated in their own homes.^[26] Hospitals in this era were the first to require medical licenses for doctors, and compensation for negligence could be made.^[27][28] Hospitals were forbidden by law to turn away patients who were unable to pay.^[29] These hospitals were financially supported by waqfs, as well as state funds.^[25]

In India, public hospitals existed at least since the reign of Firuz Shah Tughlaq in the 14th century. The Mughal emperor Jahangir in the 17th century established hospitals in large cities at government expense with records showing salaries and grants for medicine being paid for by the government.^[30]

In China, during the Song dynasty, the state began to take on social welfare functions previously provided by Buddhist monasteries and instituted public hospitals, hospices and dispensaries.^[31]

In Europe the medieval concept of Christian care evolved during the 16th and 17th centuries into a secular one. In England, after the dissolution of the monasteries in 1540 by King Henry VIII, the church abruptly ceased to be the supporter of hospitals, and only by direct petition from the citizens of London, were the hospitals St Bartholomew's, St Thomas's and St Mary of Bethlehem's (Bedlam) endowed directly by the crown; this was the first instance of secular support being provided for medical institutions.

In 1682, Charles II founded the Royal Hospital Chelsea as a retirement home for old soldiers known as Chelsea Pensioners, an instance of the use of the word "hospital" to mean an almshouse.^[32] Ten years later, Mary II founded the Royal Hospital for Seamen, Greenwich, with the same purpose.^[33]

The voluntary hospital movement began in the early 18th century, with hospitals being founded in London by the 1720s, including Westminster Hospital (1719) promoted by the private bank C. Hoare & Co and Guy's Hospital (1724) funded from the bequest of the wealthy merchant, Thomas Guy.

Other hospitals sprang up in London and other British cities over the century, many paid for by private subscriptions. St Bartholomew's in London was rebuilt from 1730 to 1759,^[38] and the London Hospital, Whitechapel, opened in 1752.

These hospitals represented a turning point in the function of the institution; they began to evolve from being basic places of care for the sick to becoming centers of medical innovation and discovery and the principal place for the education and training of prospective practitioners. Some of the era's greatest surgeons and doctors worked and passed on their knowledge at the hospitals.^[39] They also changed from being mere homes of refuge to being complex institutions for the provision and advancement of medicine and care for sick. The Charité was founded in Berlin in 1710 by King Frederick I of Prussia as a response to an outbreak of plague.

Voluntary hospitals also spread to Colonial America; Bellevue Hospital in New York City opened in 1736, first as a workhouse and then later as a hospital; Pennsylvania Hospital in Philadelphia opened in 1752, New York Hospital, now Weill Cornell Medical Center^[40] in New York City opened in 1771, and Massachusetts General Hospital in Boston opened in 1811.

When the Vienna General Hospital opened in 1784 as the world's largest hospital, physicians acquired a new facility that gradually developed into one of the most important research centers.^[41]

Another Enlightenment era charitable innovation was the dispensary; these would issue the poor with medicines free of charge. The London Dispensary opened its doors in 1696 as the first such clinic in the British Empire. The idea was slow to catch on until the 1770s,^[42] when many such organisations began to appear, including the Public Dispensary of Edinburgh (1776), the Metropolitan Dispensary and Charitable Fund (1779) and the Finsbury Dispensary (1780). Dispensaries were also opened in New York 1771, Philadelphia 1786, and Boston 1796.^[43]

The Royal Naval Hospital, Stonehouse, Plymouth, was a pioneer of hospital design in having "pavilions" to minimize the spread of infection. John Wesley visited in 1785, and commented "I never saw anything of the kind so complete; every part is so convenient, and so admirably neat. But there is nothing superfluous, and nothing purely ornamented, either within or without." This revolutionary design was made more widely known by John Howard, the philanthropist. In 1787 the French government sent two scholar administrators, Coulomb and Tenon, who had visited most of the hospitals in Europe.^[44] They were impressed and the "pavilion" design was copied in France and throughout Europe.

English physician Thomas Percival (1740–1804) wrote a comprehensive system of medical conduct, Medical Ethics; or, a Code of Institutes and Precepts, Adapted to the Professional Conduct of Physicians and Surgeons (1803) that set the standard for many textbooks.^[45] In the mid-19th century, hospitals and the medical profession became more professionalised, with a reorganisation of hospital management along more bureaucratic and administrative lines. The Apothecaries Act 1815 made it compulsory for medical students to practise for at least half a year at a hospital as part of their training.^[46]

Florence Nightingale pioneered the modern profession of nursing during the Crimean War when she set an example of compassion, commitment to patient care and diligent and thoughtful hospital administration. The first official nurses' training programme, the Nightingale School for Nurses, was opened in 1860, with the mission of training nurses to work in hospitals, to work with the poor and to teach.^[47] Nightingale was instrumental in reforming the nature of the hospital, by improving sanitation standards and changing the image of the hospital from a place the sick would go to die, to an institution devoted to recuperation and healing. She also emphasised the importance of statistical measurement for determining the success rate of a given intervention and pushed for administrative reform at hospitals.^[48]

By the late 19th century, the modern hospital was beginning to take shape with a proliferation of a variety of public and private hospital systems. By the 1870s, hospitals had more than trebled their original average intake of 3,000 patients. In continental Europe the new hospitals generally were built and run from public funds. The National Health Service, the principal provider of health care in the United Kingdom, was founded in 1948. During the nineteenth century, the Second Viennese Medical School emerged with the contributions of physicians such as Carl Freiherr von Rokitansky, Josef Škoda, Ferdinand Ritter von Hebra, and Ignaz Philipp Semmelweis. Basic medical science expanded and specialisation advanced. Furthermore, the first dermatology, eye, as well as ear, nose, and throat clinics in the world were founded in Vienna, being considered as the birth of specialised medicine.^[49]

The examples and perspective in this section deal primarily with the United States and do not represent a worldwide view of the subject. You may improve this section, discuss the issue on the talk page, or create a new section, as appropriate. (August 2020) (Learn how and when to remove this message)

By the late 19th and early 20th centuries, medical advancements such as anesthesia and sterile techniques that could make surgery less risky, and the availability of more advanced diagnostic devices such as X-rays, continued to make hospitals a more attractive option for treatment.^[50]

Modern hospitals measure various efficiency metrics such as occupancy rates, the average length of stay, time to service, patient satisfaction, physician performance, patient readmission rate, inpatient mortality rate, and case mix index.^[51]

In the United States, the number of hospitalizations grew to its peak in 1981 with 171 admissions per 1,000 Americans and 6,933 hospitals.^[50] This trend subsequently reversed, with the rate of hospitalization falling by more than 10% and the number of US hospitals shrinking from 6,933 in 1981 to 5,534 in 2016.^[52] Occupancy rates also dropped from 77% in 1980 to 60% in 2013.^[53] Among the reasons for this are the increasing availability of more complex care elsewhere such as at home or the physicians' offices and also the less therapeutic and more life-threatening image of the hospitals in the eyes of the public.^[50][54] In the US, a patient may sleep in a hospital bed, but be considered outpatient and "under observation" if not formally admitted.^[55]

In the U.S., inpatient stays are covered under Medicare Part A, but a hospital might keep a patient under observation which is only covered under Medicare Part B, and subjects the patient to additional coinsurance costs.^[55] In 2013, the Center for Medicare and Medicaid Services (CMS) introduced a "two-midnight" rule for inpatient admissions,^[56] intended to reduce an increasing number of long-term "observation" stays being used for reimbursement.^[55] This rule was later dropped in 2018.^[56] In 2016 and 2017, healthcare reform and a continued decline in admissions resulted in US hospital-based healthcare systems performing poorly financially.^[57] Microhospitals, with bed capacities of between eight and fifty, are expanding in the United States.^[58] Similarly, freestanding emergency rooms, which transfer patients that require inpatient care to hospitals, were popularised in the 1970s^[59] and have since expanded rapidly across the United States.^[59]

The Catholic Church is the largest non-government provider of health careservices in the world.^[60] It has around 18,000 clinics, 16,000 homes for the elderly and those with special needs, and 5,500 hospitals, with 65 percent of them located in developing countries.^[61] In 2010, the Church's Pontifical Council for the Pastoral Care of Health Care Workers said that the Church manages 26% of the world's health care facilities.^[62]

Modern hospitals derive funding from a variety of sources. They may be funded by private payment and health insurance or public expenditure, charitable donations.

In the United Kingdom, the National Health Service delivers health care to legal residents funded by the state "free at the point of delivery", and emergency care free to anyone regardless of nationality or status. Due to the need for hospitals to prioritise their limited resources, there is a tendency in countries with such systems for 'waiting lists' for non-crucial treatment, so those who can afford it may take out private health care to access treatment more quickly.^[63]

In the United States, hospitals typically operate privately and in some cases on a for-profit basis, such as HCA Healthcare.^[64] The list of procedures and their prices are billed with a chargemaster; however, these prices may be lower for health care obtained within healthcare networks.^[65] Legislation requires hospitals to provide care to patients in life-threatening emergency situations regardless of the patient's ability to pay.^[66] Privately funded hospitals which admit uninsured patients in emergency situations incur direct financial losses, such as in the aftermath of Hurricane Katrina.^[64]

As the quality of health care has increasingly become an issue around the world, hospitals have increasingly had to pay serious attention to this matter. Independent external assessment of quality is one of the most powerful ways to assess this aspect of health care, and hospital accreditation is one means by which this is achieved. In many parts of the world such accreditation is sourced from other countries, a phenomenon known as international healthcare accreditation, by groups such as Accreditation Canada in Canada, the Joint Commission in the U.S., the Trent Accreditation Scheme in Great Britain, and the Haute Autorité de santé (HAS) in France. In England, hospitals are monitored by the Care Quality Commission. In 2020, they turned their attention to hospital food standards after seven patient deaths from listeria linked to pre-packaged sandwiches and salads in 2019, saying "Nutrition and hydration is part of a patient's recovery."^[67]

The World Health Organization reported in 2011 that being admitted to a hospital was far riskier than flying. Globally, the chance of a patient being subject to a treatment error in a hospital was about 10%, and the chance of death resulting from an error was about one in 300. according to Liam Donaldson. 7% of hospitalised patients in developed countries, and 10% in developing countries, acquire at least one health care-associated infection. In the U.S., 1.7 million infections are acquired in hospital each year, leading to 100,000 deaths, figures much worse than in Europe where there were 4.5 million infections and 37,000 deaths.^[68]

Modern hospital buildings are designed to minimise the effort of medical personnel and the possibility of contamination while maximising the efficiency of the whole system. Travel time for personnel within the hospital and the transportation of patients between units is facilitated and minimised. The building also should be built to accommodate heavy departments such as radiology and operating rooms while space for special wiring, plumbing, and waste disposal must be allowed for in the design.^[69]

However, many hospitals, even those considered "modern", are the product of continual and often badly managed growth over decades or even centuries, with utilitarian new sections added on as needs and finances dictate. As a result, Dutch architectural historian Cor Wagenaar has called many hospitals:

"... built catastrophes, anonymous institutional complexes run by vast bureaucracies, and totally unfit for the purpose they have been designed for ... They are hardly ever functional, and instead of making patients feel at home, they produce stress and anxiety."^[70]

Some newer hospitals now try to re-establish design that takes the patient's psychological needs into account, such as providing more fresh air, better views and more pleasant colour schemes. These ideas harken back to the late eighteenth century, when the concept of providing fresh air and access to the 'healing powers of nature' were first employed by hospital architects in improving their buildings.^[70]

The research of British Medical Association is showing that good hospital design can reduce patient's recovery time. Exposure to daylight is effective in reducing depression.^[71] Single-sex accommodation help ensure that patients are treated in privacy and with dignity. Exposure to nature and hospital gardens is also important – looking out windows improves patients' moods and reduces blood pressure and stress level. Open windows in patient rooms have also demonstrated some evidence of beneficial outcomes by improving airflow and increased microbial diversity.^[72][73] Eliminating long corridors can reduce nurses' fatigue and stress.^[74]

Another ongoing major development is the change from a ward-based system (where patients are accommodated in communal rooms, separated by movable partitions) to one in which they are accommodated in individual rooms. The ward-based system has been described as very efficient, especially for the medical staff, but is considered to be more stressful for patients and detrimental to their privacy. A major constraint on providing all patients with their own rooms is however found in the higher cost of building and operating such a hospital; this causes some hospitals to charge for private rooms.^[75]

• 
  The medical center at the University of Virginia shows the growing trend for modern architecture in hospitals.
• 
  The National Health Service Norfolk and Norwich University Hospital in the UK, showing the utilitarian architecture of many modern hospitals
• 
  Hospital chapel at Fawcett Memorial Hospital (Port Charlotte, Florida)
• 
  Hinduja National Hospital, Mumbai
• 
  An intensive care unit (ICU) within a hospital
• 
  Uniklinikum Aachen in Germany
• 
  Tampere University Hospital in Tampere, Finland
• 
  All India Institute of Medical Sciences in Delhi, India
• 
  Lehigh Valley Hospital–Cedar Crest in Allentown, Pennsylvania, U.S.

• Burn center
• History of hospitals
• History of medicine
• Hospice
• Hospital network
• Lists of hospitals
• Hospitals in Thailand
• Hospital information system
• Trauma center
• The Waiting Room
• Walk-in clinic
• GP Liaison

• Brockliss, Lawrence, and Colin Jones. "The Hospital in the Enlightenment", in The Medical World of Early Modern France (Oxford UP, 1997), pp. 671–729; covers France 1650–1800
• Chaney, Edward (2000), "'Philanthropy in Italy': English Observations on Italian Hospitals 1545–1789", in: The Evolution of the Grand Tour: Anglo-Italian Cultural Relations since the Renaissance, 2nd ed. London, Routledge, 2000.
• Connor, J.T.H. "Hospital History in Canada and the United States", Canadian Bulletin of Medical History, 1990, Vol. 7 Issue 1, pp. 93–104
• Crawford, D.S. Bibliography of Histories of Canadian hospitals and schools of nursing.
• Gorsky, Martin. "The British National Health Service 1948–2008: A Review of the Historiography", Social History of Medicine, December 2008, Vol. 21 Issue 3, pp. 437–60
• Harrison, Mar, et al. eds. From Western Medicine to Global Medicine: The Hospital Beyond the West (2008)
• Horden, Peregrine. Hospitals and Healing From Antiquity to the Later Middle Ages (2008)
• McGrew, Roderick E. Encyclopedia of Medical History (1985)
• Morelon, Régis; Rashed, Roshdi (1996), Encyclopedia of the History of Arabic Science, vol. 3, Routledge, ISBN 978-0-415-12410-2
• Porter, Roy. The Hospital in History, with Lindsay Patricia Granshaw (1989) ISBN 978-0-415-00375-9
• Risse, Guenter B. Mending Bodies, Saving Souls: A History of Hospitals (1999); world coverage
• Rosenberg, Charles E. The Care of Strangers: The Rise of America's Hospital System (1995); history to 1920
• Scheutz, Martin et al. eds. Hospitals and Institutional Care in Medieval and Early Modern Europe (2009)
• Wall, Barbra Mann. American Catholic Hospitals: A Century of Changing Markets and Missions (Rutgers University Press, 2011). ISBN 978-0-8135-4940-8

• WHO Hospitals https://www.who.int/hospitals/en/
• "Global and Multilanguage Database of public and private hospitals". hospitalsworldguide.com.
• "Directory and Ranking of more than 17.000 Hospitals worldwide". hospitals.webometrics.info. Archived from the original on 21 April 2010. Retrieved 7 November 2008.

 

Part of a series on
Accounting
Constant purchasing power Historical cost Management Tax
Major types Audit Budget Cost Forensic Financial Fund Governmental Management Social Tax
Key concepts Accounting period Accrual Constant purchasing power Economic entity Fair value Going concern Historical cost Matching principle Materiality Revenue recognition Unit of account
Selected accounts Assets Cash Cost of goods sold Depreciation / Amortization (business) Equity Expenses Goodwill Liabilities Profit Revenue
Accounting standards Generally-accepted principles Generally-accepted auditing standards Convergence International Financial Reporting Standards International Standards on Auditing Management Accounting Principles
Financial statements Annual report Balance sheet Cash-flow Equity Income Management discussion Notes to the financial statements
Bookkeeping Bank reconciliation Debits and credits Double-entry system FIFO and LIFO Journal Ledger / General ledger Trial balance
Auditing Financial Internal Firms Report Sarbanes–Oxley Act
People and organizations Accountants Accounting organizations Luca Pacioli
Development History Research Positive accounting Sarbanes–Oxley Act
Misconduct Creative Earnings management Error account Hollywood Off-balance-sheet Two sets of books

Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business.^[1] This involves the preparation of financial statements available for public use. Stockholders, suppliers, banks, employees, government agencies, business owners, and other stakeholders are examples of people interested in receiving such information for decision making purposes.

Financial accountancy is governed by both local and international accounting standards. Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for financial accounting used in any given jurisdiction. It includes the standards, conventions and rules that accountants follow in recording and summarizing and in the preparation of financial statements.

On the other hand, International Financial Reporting Standards (IFRS) is a set of accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board (IASB).^[2] With IFRS becoming more widespread on the international scene, consistency in financial reporting has become more prevalent between global organizations.

While financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company, managerial accounting provides accounting information to help managers make decisions to manage the business.

Financial accounting and financial reporting are often used as synonyms.

1. According to International Financial Reporting Standards: the objective of financial reporting is:

To provide financial information that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the reporting entity.^[3]

2. According to the European Accounting Association:

Capital maintenance is a competing objective of financial reporting.^[4]

Financial accounting is the preparation of financial statements that can be consumed by the public and the relevant stakeholders. Financial information would be useful to users if such qualitative characteristics are present. When producing financial statements, the following must comply: Fundamental Qualitative Characteristics:

• Relevance: Relevance is the capacity of the financial information to influence the decision of its users. The ingredients of relevance are the predictive value and confirmatory value. Materiality is a sub-quality of relevance. Information is considered material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements.
• Faithful Representation: Faithful representation means that the actual effects of the transactions shall be properly accounted for and reported in the financial statements. The words and numbers must match what really happened in the transaction. The ingredients of faithful representation are completeness, neutrality and free from error. It signifies that the accountants have acted in good faith during the process of representation.

Enhancing Qualitative Characteristics:

• Verifiability: Verifiability implies consensus between the different knowledgeable and independent users of financial information. Such information must be supported by sufficient evidence to follow the principle of objectivity.
• Comparability: Comparability is the uniform application of accounting methods across entities in the same industry. The principle of consistency is under comparability. Consistency is the uniform application of accounting across points in time within an entity.
• Understandability: Understandability means that accounting reports should be expressed as clearly as possible and should be understood by those to whom the information is relevant.
• Timeliness: Timeliness implies that financial information must be presented to the users before a decision is to be made.

The statement of cash flows considers the inputs and outputs in concrete cash within a stated period. The general template of a cash flow statement is as follows: Cash Inflow - Cash Outflow + Opening Balance = Closing Balance

Example 1: in the beginning of September, Ellen started out with $5 in her bank account. During that same month, Ellen borrowed $20 from Tom. At the end of the month, Ellen bought a pair of shoes for $7. Ellen's cash flow statement for the month of September looks like this:

• Cash inflow: $20
• Cash outflow:$7
• Opening balance: $5
• Closing balance: $20 – $7 + $5 = $18

Example 2: in the beginning of June, WikiTables, a company that buys and resells tables, sold 2 tables. They'd originally bought the tables for $25 each, and sold them at a price of $50 per table. The first table was paid out in cash however the second one was bought in credit terms. WikiTables' cash flow statement for the month of June looks like this:

• Cash inflow: $50 - How much WikiTables received in cash for the first table. They didn't receive cash for the second table (sold in credit terms).
• Cash outflow: $50 - How much they'd originally bought the 2 tables for.
• Opening balance: $0
• Closing balance: $50 – 2*$25 + $0 = $50–50=$0 - Indeed, the cash flow for the month of June for WikiTables amounts to $0 and not $50.

Important: the cash flow statement only considers the exchange of actual cash, and ignores what the person in question owes or is owed.

The statement of profit or income statement represents the changes in value of a company's accounts over a set period (most commonly one fiscal year), and may compare the changes to changes in the same accounts over the previous period. All changes are summarized on the "bottom line" as net income, often reported as "net loss" when income is less than zero.

The net profit or loss is determined by:

Sales (revenue)

– cost of goods sold

– selling, general, administrative expenses (SGA)

– depreciation/ amortization

= earnings before interest and taxes (EBIT)

– interest and tax expenses

= profit/loss

The balance sheet is the financial statement showing a firm's assets, liabilities and equity (capital) at a set point in time, usually the end of the fiscal year reported on the accompanying income statement. The total assets always equal the total combined liabilities and equity. This statement best demonstrates the basic accounting equation:

Assets = Liabilities + Equity

The statement can be used to help show the financial position of a company because liability accounts are external claims on the firm's assets while equity accounts are internal claims on the firm's assets.

Accounting standards often set out a general format that companies are expected to follow when presenting their balance sheets. International Financial Reporting Standards (IFRS) normally require that companies report current assets and liabilities separately from non-current amounts.^[5][6] A GAAP-compliant balance sheet must list assets and liabilities based on decreasing liquidity, from most liquid to least liquid. As a result, current assets/liabilities are listed first followed by non-current assets/liabilities. However, an IFRS-compliant balance sheet must list assets/liabilities based on increasing liquidity, from least liquid to most liquid. As a result, non-current assets/liabilities are listed first followed by current assets/liabilities.^[7]

Current assets are the most liquid assets of a firm, which are expected to be realized within a 12-month period. Current assets include:

• cash - physical money
• accounts receivable - revenues earned but not yet collected
• Merchandise inventory - consists of goods and services a firm currently owns until it ends up getting sold
• Investee companies - expected to be held less than one financial period
• prepaid expenses - expenses paid for in advance for use during that year

Non-current assets include fixed or long-term assets and intangible assets:

• fixed (long term) assets
  • property
  • building
  • equipment (such as factory machinery)
• intangible assets
  • copyrights
  • trademarks
  • patents
  • goodwill

Liabilities include:

• current liabilities
  • trade accounts payable
  • dividends payable
  • employee salaries payable
  • interest (e.g. on debt) payable
• long term liabilities
  • mortgage notes payable
  • bonds payable

Owner's equity, sometimes referred to as net assets, is represented differently depending on the type of business ownership. Business ownership can be in the form of a sole proprietorship, partnership, or a corporation. For a corporation, the owner's equity portion usually shows common stock, and retained earnings (earnings kept in the company). Retained earnings come from the retained earnings statement, prepared prior to the balance sheet.^[8]

This statement is additional to the three main statements described above. It shows how the distribution of income and transfer of dividends affects the wealth of shareholders in the company. The concept of retained earnings means profits of previous years that are accumulated till current period. Basic proforma for this statement is as follows:

Retained earnings at the beginning of period

+ Net Income for the period

- Dividends

= Retained earnings at the end of period.^[9]

One of the basic principles in accounting is "The Measuring Unit principle":

The unit of measure in accounting shall be the base money unit of the most relevant currency. This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements."^[10]

Historical Cost Accounting, i.e., financial capital maintenance in nominal monetary units, is based on the stable measuring unit assumption under which accountants simply assume that money, the monetary unit of measure, is perfectly stable in real value for the purpose of measuring (1) monetary items not inflation-indexed daily in terms of the Daily CPI and (2) constant real value non-monetary items not updated daily in terms of the Daily CPI during low and high inflation and deflation.

The stable monetary unit assumption is not applied during hyperinflation. IFRS requires entities to implement capital maintenance in units of constant purchasing power in terms of IAS 29 Financial Reporting in Hyperinflationary Economies.

Financial accountants produce financial statements based on the accounting standards in a given jurisdiction. These standards may be the Generally Accepted Accounting Principles of a respective country, which are typically issued by a national standard setter, or International Financial Reporting Standards (IFRS), which are issued by the International Accounting Standards Board (IASB).

Financial accounting serves the following purposes:

• producing general purpose financial statements
• producing information used by the management of a business entity for decision making, planning and performance evaluation
• producing financial statements for meeting regulatory requirements.

• Systematic recording of transactions: basic objective of accounting is to systematically record the financial aspects of business transactions (i.e. book-keeping). These recorded transactions are later on classified and summarized logically for the preparation of financial statements and for their analysis and interpretation.
• Ascertainment of result of above recorded transactions: accountant prepares profit and loss account to know the result of business operations for a particular period of time. If expenses exceed revenue then it is said that the business is running under loss. The profit and loss account helps the management and different stakeholders in taking rational decisions. For example, if business is not proved to be remunerative or profitable, the cause of such a state of affairs can be investigated by the management for taking remedial steps.
• Ascertainment of the financial position of business: businessman is not only interested in knowing the result of the business in terms of profits or loss for a particular period but is also anxious to know that what he owes (liability) to the outsiders and what he owns (assets) on a certain date. To know this, accountant prepares a financial position statement of assets and liabilities of the business at a particular point of time and helps in ascertaining the financial health of the business.
• Providing information to the users for rational decision-making: accounting as a 'language of business' communicates the financial result of an enterprise to various stakeholders by means of financial statements. Accounting aims to meet the financial information needs of the decision-makers and helps them in rational decision-making.
• To know the solvency position: by preparing the balance sheet, management not only reveals what is owned and owed by the enterprise, but also it gives the information regarding concern's ability to meet its liabilities in the short run (liquidity position) and also in the long-run (solvency position) as and when they fall due.

The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting.

The trial balance, which is usually prepared using the double-entry accounting system, forms the basis for preparing the financial statements. All the figures in the trial balance are rearranged to prepare a profit & loss statement and balance sheet. Accounting standards determine the format for these accounts (SSAP, FRS, IFRS). Financial statements display the income and expenditure for the company and a summary of the assets, liabilities, and shareholders' or owners' equity of the company on the date to which the accounts were prepared.

Asset, expense, and dividend accounts have normal debit balances (i.e., debiting these types of accounts increases them).

Liability, revenue, and equity accounts have normal credit balances (i.e., crediting these types of accounts increases them).

0 = Dr Assets                            Cr Owners' Equity                Cr Liabilities  
          .       _____________________________/\____________________________       .
          .      /    Cr Retained Earnings (profit)         Cr Common Stock  \      .
          .    _________________/\_______________________________      .            .
          .   / Dr Expenses       Cr Beginning Retained Earnings \     .            .
          .     Dr Dividends      Cr Revenue                           .            .
      \________________________/  \______________________________________________________/
       increased by debits           increased by credits


          Crediting a credit                         
Thus -------------------------> account increases its absolute value (balance)
           Debiting a debit                             


          Debiting a credit                         
Thus -------------------------> account decreases its absolute value (balance)
          Crediting a debit

When the same thing is done to an account as its normal balance it increases; when the opposite is done, it will decrease. Much like signs in math: two positive numbers are added and two negative numbers are also added. It is only when there is one positive and one negative (opposites) that you will subtract.

However, there are instances of accounts, known as contra-accounts, which have a normal balance opposite that listed above. Examples include:

• Contra-asset accounts (such as accumulated depreciation and allowances for bad debt or obsolete inventory)
• Contra-revenue accounts (such as sales allowances)
• Contra-equity accounts (such as treasury stock)

1. Financial accounting aims at finding out results of accounting year in the form of Profit and Loss Account and Balance Sheet. Cost Accounting aims at computing cost of production/service in a scientific manner and facilitate cost control and cost reduction.
2. Financial accounting reports the results and position of business to government, creditors, investors, and external parties.
3. Cost Accounting is an internal reporting system for an organisation's own management for decision making.
4. In financial accounting, cost classification based on type of transactions, e.g. salaries, repairs, insurance, stores etc. In cost accounting, classification is basically on the basis of functions, activities, products, process and on internal planning and control and information needs of the organization.
5. Financial accounting aims at presenting 'true and fair' view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It aims at computing 'true and fair' view of the cost of production/services offered by the firm.^[11]

Many professional accountancy qualifications cover the field of financial accountancy, including Certified Public Accountant CPA, Chartered Accountant (CA or other national designations, American Institute of Certified Public Accountants AICPA and Chartered Certified Accountant (ACCA).

• Constant item purchasing power accounting
• DIRTI 5
• Historical cost accounting
• Philosophy of accounting
• Accounting analyst, whose job involves evaluating public company financial statements
• Management accounting, the other main division of accounting
• Bookkeeping

• David Annand, Introduction to Financial Accounting, Athabasca University, ISBN 978-0-9953266-4-4
• Financial Accounting (2015) doi:10.24926/8668.0701 ISBN 978-1-946135-10-0
• Johnny Jackson, Introduction to Financial Accounting, Thomas Edison State University.
• Alexander, D., Britton, A., Jorissen, A., "International Financial Reporting and Analysis", Second Edition, 2005, ISBN 978-1-84480-201-2