Financial Accounting

Financial accounting focuses on the reporting of an organization's financial information to external users of the information, such as investors, regulators and suppliers. It calculates and records business transactions and prepares financial statements for the external users in accordance with generally accepted accounting principles (GAAP). GAAP, in turn, arises from the wide agreement between accounting theory and practice, and change over time to meet the needs of decision-makers. Financial accounting produces past-oriented reports—for example the financial statements prepared in 2006 reports on performance in 2005—on an annual or quarterly basis, generally about the organization as a whole. This branch of accounting is also studied as part of the board exams for qualifying as an actuary. It is interesting to note that these two professionals, accountants and actuaries, have created a culture of being arch rivals.