| Financial Accounting: |
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Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, government agencies, owners, and other stakeholders. 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.
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Financial accountancy is used to prepare accounting information for people outside the organisation 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.
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Financial accountancy is governed by both local and international accounting standards.
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Financial accountants produce financial statements based on Generally Accepted Accounting Principles (GAAP) of a respective country.
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| Financial accounting serves following purposes: |
- Producing general purpose financial statements.
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Provision of information used by management of a business entity for decision making, planning and performance evaluation.
- For meeting regulatory requirements.
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