Meaning and Nature of Financial Accounting

Meaning of Financial Accounting

Financial Accounting is mainly concerned with the preparation of financial statements and communication of accounting or business information to the various parties interested in the organisation. It is concerned with the provision of information to external parties outside the organisation. Its aim is to ascertain the profit or loss and to show the financial position of the organisation. source

Nature or Characteristic of Financial Management

We can understand the nature of financial accounting from its characteristics given below:

1. The main purpose of financial accounting is to provide information to external users, It is concerned with the preparation of financial statements and communicating, the information to investors, creditors and other external users.

2. Financial accounting gives historical data.

3. Transactions in financial nature is recorded in the financial accounts.

4. Transactions are recorded on the basis concepts and conventions.

5. Financial accounts is subject to accounting standards to ensure uniformity.

6. Financial accounts deal with all monetory transactions,

7. Financial accounts deal with external transactions.

8. Financial accounts are the accounts of whole organization

9. Emphasis given in financial accounting is on reporting, and not on control.

10. Financial accounts form the basis of fulfilling the legal requirements.

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