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Definition and Importance of Financial Accounting
Financial statements are prepared by the financial accounts department to supply trouble free decision-making power to the decision maker, such as suppliers, banks, stakeholders, government agencies, owners, employee, and other stakeholders. There are primarily two types of units to measure the Financial Capital maintenance, i.e. nominal monetary units, and units of constant purchasing power. The rudimentary requirement of the financial accounting is to reduce the problem faced by the principal agent via different measuring methods and observing the agent performance on a timely basis and notifying the resulted outcome to the curious users.
There is a restriction on the usage of the financial accounting to the externals of the company. Furthermore, reports are prepared for the people belongs from outside the organization. In other words, financial accounting is the field of accounting concerned with the summary, analysis, and reporting of financial transactions about a business.
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