Financial accounting
In one sentenceA branch of accounting that records a business's transactions and presents them in financial statements under set standards, for external users such as owners, banks and official bodies.
Simply put
This is the accounting most people know: journal entries, a general ledger, a trial balance, and then financial statements prepared under the standards adopted in Saudi Arabia.
It mostly looks to the past (what actually happened) and follows fixed rules, so that one business can be compared with another and one year with another.
Example
At year-end a contracting business prepares the statement of financial position, the income statement, the statement of cash flows and the notes, to submit to the bank and to file with the Zakat return: this is the work of financial accounting.
Don't confuse it with
Management accountingManagement accounting is internal, flexible and forward-looking, while financial accounting is external and governed by the standards.