The branch of accounting concerned with classifying, measuring, and recording the transactions of a business. At the end of a period, usually a year but sometimes less, a profit and loss account and a balance sheet are prepared to show the performance and position of the business. Financial accounting is primarily concerned with providing a true and fair view of the activities of a business to parties external to it. To ensure that this is done correctly, considerable attention will be paid to accounting concepts and to any requirements of legislation, accounting standards, and (where appropriate) the regulations of the stock exchange. Financial accounting can be separated into a number of specific activities, such as conducting audits, taxation, book-keeping, and insolvency. Financial accountants need not be qualified, in that they need not belong to an accountancy body, although the majority of those working in public practice will be. Compare management accounting.
Subjects: Financial Institutions and Services — Accounting.