Financial accounting is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The fundamental need for financial accounting is to reduce principal-agent problem by measuring and monitoring agents' performance and reporting the results to interested users.
Financial
accountancy is used to prepare accounting information for people outside the organization or not involved in the
day-to-day running of the compan\-. Management accounting provides
accounting information to help managers make decisions
to manage the business.
In
short, financial accounting is
the process of summarizing financial data taken from an oroanization's accounting records and publishing in the form uf
annual (otrnore ti-cquent) reports for the benefit ofpeople outside
the organization.
Financial
accountancy is (overned b_both local and international accounting standard;.