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What Type of Financial Reports Do You Use in Accounting ?
 Historically, the art of accounting can be traced back to the earliest days of civilization. Accounting refers to the process of measuring and interpreting financial activity. Often, it is widely referred to as the “language of business”. By learning accounting, one can understand and communicate the financial operations of business organizations. More...
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What Is Financial Accounting ?
| Financial accounting is a branch in accounting which focus primarily on the preparation of financial statements for decision makers like banks, stockholders, and other stakeholders. |
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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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