There are a number of financial information supplier groups as well as several external user groups. Here is a summary. The primary focus of financial accounting is on the information needs of investors and creditors.
Financial statements convey financial information to external users.
The capital markets provide a mechanism to help our economy allocate resources efficiently. Corporations, the dominant form of business organization in the United States, acquire capital from investors in exchange for ownership interest and by borrowing from creditors. A company will be able to provide a return to investors and creditors only if it can generate cash receipts from selling a product or service that exceed the cash disbursements necessary to provide that product or service. The objective of financial accounting is to provide information to investors and creditors to help them predict future cash flows. Cash versus accrual accounting Over short periods of time, operating cash flow may not be an accurate predictor of future operating cash flows.