Financial accounting refers to the process of recording, summarizing, and reporting the transactions involved in the operations of a business over a certain period of time, usually quarterly or annual.
These transactions are summarized in several financial statements, such as income statement (also called profit and loss statement), balance sheet, cash flow statement, and so on.
Companies that are listed on stock exchanges are required to follow accounting standards mandated by their regulatory authorities.
Two of the most widely used standards are U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). These accounting principles are aimed at providing consistent and uniform information about a company’s performance to different stakeholders.