Financial accounting (or financial accountancy) 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. Financial capital
maintenance can be measured in either nominal monetary units or units
of constant purchasing power.
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.
Financial accountancy is used to prepare accounting information
for people outside the organization or not involved in the
day-to-day running of the company. Management accounting
provides accounting information to help managers make
decisions to manage the business.
In short, financial accounting is the process of summarizing
financial data taken from an organization's accounting records
and publishing in the form of annual (or more frequent) reports
for the benefit of people outside the organization.