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It has been observed that many students find Financial Accounting tough because of the number of concepts and mathematical Applications. In the initial stages of any Major program related to Accounting, it is a challenging task to grasp the concepts related to the financial aspect of accounting. Hence, an appropriate guidance is needed to get a right direction.
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Definition and Importance of Financial Accounting
Financial accountancy is the concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The fundamental need for financial accounting is to reduce principal-agent problem by measuring and monitoring agents' performance and reporting the results to interested users.
Use of Financial accounting is limited to the externals of a company. It is used to prepare reports for the people outside the organization. In other words, 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.
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