Financial accounting is the specialized branch of accounting focused on recording, summarizing, and reporting a company's business transactions for a specific period through the creation of standardized financial statements, such as the balance sheet, income statement, and statement of cash flows. Unlike managerial accounting, which serves internal decision-makers, financial accounting is primarily directed at external stakeholders—including investors, creditors, and regulatory agencies—to provide them with a consistent and comparable basis for assessing the company's financial performance and health. This process is strictly governed by established principles, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), to ensure accuracy and transparency in financial reporting.