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. In direct contrast to financial accountancy, managerial accountancy is for internal decision making and does not have to follow any rules enforced by standard setting authorities. All activities carried out by financial accountancy bodies are regulated by Generally Accepted Accounting Principles guidelines (GAAP).
The practice is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company. It also helps people to store information on a company or organization that would be difficult to memorize.
Those in favor of financial accounting for a business or company, large or small, point to a number of factors which they feel are advantageous. Firstly, it allows people to measure the profitability and value of a business, rather like having a dossier of the business’s transactions you can see how well or how poorly the company is doing. It also helps when attempting to compile a company report for those outside the company, this might be for prospective buyers or investors, who wish to see a full and detailed account before becoming involved. Financial accounting and the information it generates can act like a barometer for an organization, allowing achievements and losses to be measured against rivals and competitors and produce a clear picture of where a firm stands in its particular field.
Not all are in favor of financial accounting; some believe that despite the previously mentioned advantages there are a number of disadvantages to the practice.
The practice is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company. It also helps people to store information on a company or organization that would be difficult to memorize.
Those in favor of financial accounting for a business or company, large or small, point to a number of factors which they feel are advantageous. Firstly, it allows people to measure the profitability and value of a business, rather like having a dossier of the business’s transactions you can see how well or how poorly the company is doing. It also helps when attempting to compile a company report for those outside the company, this might be for prospective buyers or investors, who wish to see a full and detailed account before becoming involved. Financial accounting and the information it generates can act like a barometer for an organization, allowing achievements and losses to be measured against rivals and competitors and produce a clear picture of where a firm stands in its particular field.
Not all are in favor of financial accounting; some believe that despite the previously mentioned advantages there are a number of disadvantages to the practice.
