Financial accounting is a type of accounting that quantifies a company’s management status and financial condition, and reports it to the outside world.
Specifically, it includes the creation of financial statements, the recording of daily corporate activities, and the definition of accounting policies. Its purpose is to disclose the company’s financial condition and management status to external stakeholders such as investors, creditors, and tax offices in a timely and appropriate manner. All corporations are legally obligated to perform financial accounting.
Financial accounting fulfills the function of providing information and adjusting interests. However, unlike management accounting, which is accounting for managing the internal affairs of a company and is performed at the discretion of the company, its purpose differs from financial accounting, which targets external stakeholders of the company.
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