Question

What do you mean by financial accounting ? Explain the main functions and limitations of financial accounting.​

Answer 1

Answer:

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Explanation:

Financial Accounting is concerned with providing information to external users. It refers to the preparation of general purpose reports for use by persons outside a business enterprise, such as shareholders (existing and potential), creditors, financial analysts, labour unions, government authorities, and the like.

Answer 2

Answer:

• Financial accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.

• Accounting does not reflect the current financial position of the business as it is historical in nature. In accounting, the financial statement profit & loss account has a tendency to match the current revenues with historical costs and not with current expenses. Inflation is not considered in accounting statements.

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