Financial accounting is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial accounting is used to prepare accounting information for people outside the organization or not involved in the day-to-day running of the company.
In short, financial accounting is the process of summarizing financial data taken from an organization’s accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization. Financial accounting is governed by both local and international accounting standards. However, with the adoption of International Financial Reporting Standards (IFRSs) in 2012 local accounting standards are now same as international accounting standards.