Financial accounting is the process of recording, summarizing, and reporting financial transactions of a business. It provides stakeholders, including investors, creditors, and regulatory agencies, with essential financial information through standardized financial statements such as the balance sheet, income statement, and cash flow statement. These statements reflect the company's financial position, performance, and cash flows over a specific period, adhering to generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS). Financial accounting emphasizes accuracy, transparency, and consistency, enabling stakeholders to make informed decisions. It also plays a crucial role in ensuring compliance with legal requirements and facilitating audits. By providing a clear picture of a company's financial health, financial accounting supports strategic planning and resource allocation.
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