What Is Financial Accounting

       The principle of financial accounting is to decrease principal agent cost to the minimum by monitoring performance. A typical financial accountancy will prepare accounting data for people outside the company. On the other hands, the information to help decision maker is usually provided by “Managerial accounting”. Financial accounting is performed according to “Generally Accepted Accounting Principles (GAAP)” guidelines.

            In short, financial accounting is applied for the following purposes:

• To create general purpose financial statements
• Provide information for planning
• Provide information for performance evaluation
• For meeting regulatory requirements.

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