Financial Accounting
Accounting glossary ยท Understand, connect, apply
Financial accounting prepares general-purpose financial reports for external users such as investors and lenders, using the applicable accounting framework.
Example
A company prepares annual financial statements that a bank reviews when considering a loan.
Remember the difference
Financial accounting focuses on external reporting; managerial accounting supports internal decisions.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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