Financial Accounting

Financial Accounting is the process of taking the raw book keeping data of the business and turning it into useful information for stakeholders. The output is a set of financial statements which summarises the performance of the business to a set date.

The statements form the basis of the businesses’ statutory compliance – for example, submission of Corporation Tax Returns – and because the format of the financial statements is set out in the Companies Act, stakeholders in the business – for example, a bank – can make judgements about risk and investment.

The financial statements are historic – they explain and summarise past performance – and are generally of greater benefit for outsiders looking in to the business, rather than a tool for managers to run the business and make decisions.