Problems & Solutions in Accounting Basics
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Financial accounting is the process of recording, categorizing, and reporting the transactions of a business. In contrast to other fields in accounting such as personal accounting or managerial accounting, financial accounting is specifically concerned with the preparation of financial statements for public use as required by banks, government regulators, shareholders, and other stakeholders. These statements typically include a company’s income statement (also known as a profit and loss or P&L statement), balance sheet, and statement of cash flows.
Accurate financial accounting plays a critically important role in financial management, as these statements collectively provide an agreed-upon framework for both internal and external parties to evaluate the financial health of a company.
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