What is Financial Accounting?

Financial accounting serves as the framework through which organizations report the effectiveness of their operating, investing, and financing activities during a time period. To put it simply, financial accounting is the process companies must follow in order to prepare summary reports of the entity's financial successes and failures so that interested parties can make decisions about current or potential involvement with the company.

Financial accountants are much like historians and storytellers in that they are responsible for reporting what happened in the past. The principles and assumptions at the core of financial accounting are extremely important. Without them, we wouldn't be able to effectively compare one company to another.

Financial Accounting is typically studied in four iterations within higher education (though business schools vary in their approaches).

Introductory Financial Accounting

One's study of financial accounting typically begins with an introductory course. Sometimes these courses are called 'Principles' courses or 'Fundamentals' courses. Almost every student majoring in business, whether it be management, marketing, finance, or accounting, must take an introductory class. As the name suggests, this class is intended to introduce students to the world of financial accounting.

Advanced Financial Accounting

Advanced Financial Accounting courses typically cover topics such as acquisitions, consolidation of financial statements, intercompany transactions, foreign currency transactions, translation of foreign entity statements, among others. In some cases, accounting for non-profit organizations and governmental entities is covered in this course.