Financial accounting focuses on preparing external financial reports that are used by outsiders to assess the financial strength of a business.

Question

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Financial accounting is primarily concerned with the preparation of financial statements, such as the balance sheet, income statement, and cash flow statement, that are intended for use by external stakeholders, such as investors, creditors, and regulatory agencies, to evaluate the financial health and performance of a business.

Financial Accounting Focuses on Preparing External Financial Reports That Are