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financial accounting
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financial accounting

accounting
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Quick Summary

Financial accounting is the process of recording, summarizing, and reporting a company's financial transactions over a period of time. This information is primarily used by external stakeholders, such as investors and creditors, to make informed decisions about the company's financial health and performance.123

Key financial reports include the balance sheet, which shows a company's assets, liabilities, and owner's equity on a specific date, and the income statement, which details revenues and expenses over a period. These statements help assess a company's liquidity, solvency, and profitability. Financial accounting adheres to principles like relevance and reliability to ensure the information is useful for decision-making.41

Summary created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.
6 Britannica Sources
  1. financial statement
  2. accounting - Performance reporting
  3. accounting - The objectives and characteristics of financial reporting
  4. accounting - Disclosure and auditing requirements
  5. accounting - Problems of measurement and the limitations of financial reporting
  6. accounting

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