Financial Accounting

The purpose of this page is to outline the important concepts of financial accounting.

The Role of Financial Accounting

Financial Accounting involves the accumulation and reporting of accounting information that is oriented primarily toward external users, such as lenders and investors. Since the reports are aimed primarily at external users, they must be prepared according to uniform guidelines, called generally accepted accounting principles (GAAP). Many organizations have been instrumental in the development of GAAP. The earliest, and one of the most influential is the American Institute of Certified Public Accountants (AICPA) through their Committee on Accounting Procedure and the Accounting Principles Board. Since 1973, the seven (7) member Financial Accounting Standards Board (FASB) has provided oversight for establishment and continuous improvement of accounting principles. Other important organizations in the development of GAAP include the Securities and Exchange Commission (SEC) and the American Accounting Association (AAA)

Financial reporting is accomplished by an organization's issuance of four (4) financial statements with a notes section for additional disclosures not readily available in the financial statements.

Last Updated March 9, 1998 by Robert L. (Bob) Putman