Financial accounting

Definition

Financial accounting is the process of recording, summarizing, and reporting a company's financial transactions over a period of time to produce financial statements. These standardized reports provide insights into the company's financial health for external parties such as investors, creditors, and regulators.

Related terms

Balance Sheet:

A financial statement that provides a snapshot of a company’s financial condition at a specific point in time by detailing assets, liabilities, and shareholders’ equity.

Income Statement:

A report that shows how much revenue a company earned over a specific period, along with the costs and expenses associated with earning that revenue, culminating in the net income or loss.

Cash Flow Statement:

A document that provides an overview of cash inflows and outflows from operating, investing, and financing activities over a period, showing how changes in balance sheet accounts affect cash and cash equivalents