Financial Accounting

Financial accounting is the branch of accounting focused on systematically recording, summarizing, and reporting a company’s financial transactions in accordance with established accounting standards like GAAP or IFRS. It produces formal financial statements — including the balance sheet, income statement, and cash flow statement — that provide an accurate picture of a business’s financial health over a specific period.

Financial accounting emphasizes historical accuracy, objectivity, and compliance, distinguishing it from managerial accounting, which focuses on internal operational decision-making. Financial accounting plays a critical role in enabling investor confidence, supporting credit decisions, and meeting statutory reporting obligations.