Financial accounting is the basis that dictates the rules, processes and standards of financial reporting.
Non-profit organizations, corporations and small businesses use financial accountants to prepare their books and records and create their financial statements.
Financial statements are created through the use of financial statements such as balance sheet, income statement, cash flow statement and statement of changes in equity.
Financial accounting differs from management (or cost) accounting as financial reporting is more for reporting to external parties and cost accounting is more for internal strategic planning.
Accounting can be kept on an accrual basis (recording of expenses for items not yet paid) or on a cash basis (only cash transactions are taken into account).