Business Ethics and Corporate Governance, Second Edition

FINANCIAL ACCOUNTING

Financial accounting is defined as reporting of the financial position and performance of a firm through financial statements issued to external users on a periodic basis. Financial statements, as stated earlier, typically include the balance sheet, profit and loss accounts and the cash flow statements followed by supporting documents. These documents are published by all the listed public limited companies and are required to be audited by external auditors for their accuracy and integrity.

The main characteristics of financial accounting are as follows:

• The financial statements are meant primarily for external users such as investors, shareholders, analysts etc.
• The financial statements must be prepared in compliance ...