Financial accounting: what it is and what it means

Financial accounting is the business recording system that produces documents for tax authorities and financial statements — annual financial statements, tax returns — with a documentary and regulatory dimension. It often uses the same figures as management control, but it answers different questions: it does not guide operational decisions in the present; it takes a snapshot of the past to meet legal obligations. Purpose, timing and audience are distinct from those of management control.

Distinctive: documentary and regulatory dimension
Distinctive: meet legal obligations
Essential: documents for tax authorities and financial statements
Essential: snapshot of the past
Constant: purpose, timing and audience are distinct

Glossary

Financial accounting

A recording system that produces documents for tax and financial statement purposes to meet regulatory requirements, distinct from management control in purpose, timing and audience.