What is financial accounting?
Financial accounting focuses on collecting a business's financial data in preparation for reporting, and
keeping track of income and expenses. A central aspect of financial accounting is collecting key data,
including receipts, invoices and reports that relate to business income and expenses. Accounting also
involves maintaining and managing financials whether this is done manual. Some key accounting roles
include:
Collecting financial data on income and expenses.
Managing the general ledger to keep all transactions in one place.
Generating the income statement, balance sheet and statement of cash flow.
What are the differences between financial reporting and financial accounting?
So, what are the key differences between financial reporting and accounting? And how might you use
them in your business? Let’s explore some key differences below:
Storing vs. analysing — accounting is for generating and storing financial information to be later
analysed via financial reporting.
Compiling information — financial reporting is for compiling all information, which isn’t possible
with financial accounting.
Accounting rules — with financial accounting, specific rules need to be followed in order to
remain consistent and keep business accounts running smoothly. If rules aren’t followed,
calculations can be completely disturbed, which results in inaccurate financial reports.
Forecasting — financial reporting focuses on forecasting future finances and influencing future
expenditures. Accounting gathers this information so that it can be analysed with reporting in
the future.