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Financial accounting is regarded as one of the specialized branches of accounting that are studied in order to understand how to keep a track record of financial transactions of a company. The transactions are recorded, summarized and presented in the form of financial report or statement such as balance sheet according to the standardized guidelines. It is one of the most beneficial processes of preparing the financial statements used by the companies in order to present their financial performance and position to the external people that mainly include investors, suppliers, creditors and customers.
There are a series of established accounting principles utilized by Financial Accounting. The selection of these accounting principles to use during the accounting process largely depends upon the requirements be it regulatory and reporting, of the business faces. The purpose of the establishment of the accounting principles is to give consistency in the information to be provided to the investors, regulators, creditors and authorities.
There are mainly five classifications of the financial data used by the financial statements in the financial accounting are; revenues, assets, liabilities, expenses and equity. Revenues are expenses can be reported on the income statement which may include all aspects from R&D to payroll.
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