Financial accounting records, summarizes, and reports transactions to external stakeholders.

The Accounting Equation: Assets = Liabilities + Equity, is its foundation.

Accrual Basis Accounting recognizes revenues when earned and expenses when incurred, not when cash is exchanged.

The three core statements are the Income Statement (profitability), Balance Sheet (financial position), and Cash Flow Statement (cash movement).

These statements are interconnected and provide a holistic view of a company's financial health.

Ensures transparency, comparability, and enables informed economic decision-making by external users.