What is financial accounting? Definition and meaning
Financial accounting, FiBu for short, monitors and records all monetary and service flows within a company.
In doing so, all income and expenditure, as well as shares and other fixed assets, are systematically recorded in accounts using accounting methods.
Once an accounting period (month, quarter, year) has ended, the accounts are closed. Based on the data from financial accounting, a balance sheet and a profit and loss statement (P&L) can be prepared. These reports provide information about the success and economic viability of the company. They must be submitted regularly to tax authorities.
Financial accounting is legally mandatory for every company and self-employed individual. The size of the company determines whether single-entry accounting or double-entry accounting is required.