Financial Accounting

1. Define “financial accounting.”

2. Understand the connection between financial accounting and the communication of information.

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3. Explain the importance of learning to understand financial accounting.

4. List decisions that an individual might make about an organization.

5. Differentiate between financial accounting and managerial accounting.

6. Provide reasons for individuals to be interested in the financial accounting information supplied by their employers.

In simplest terms, financial accounting is the communication of information about a business or other

type of organization (such as a charity or government) so that individuals can assess its financial health and

prospects. Probably no single word is more relevant to financial accounting than “information.” Whether it is

gathering financial information about a specific organization, putting that information into a structure designed

to enhance communication, or working to understand the information being conveyed, financial accounting is

intertwined with information.

In today’s world, information is king. Financial accounting provides the rules and structure for the conveyance of

financial information about businesses (and other organizations).