We can define Financial Accounting as a technique, practiced especially by managers of companies which is based on a cash flow and the preparation of financial statements.
These statements are basically the obligations of a legal entity, with or without profit, such as accounts payable, accounts receivable, assets, and liabilities, among others.
The application of financial accounting date of mid-twentieth century, and appeared in the United States as an aspect of general accounting.
The financial accounting subsequently continued the administrative accounting, which in turn had given rise Departmental Accounting, and Analysis and Consolidated Balance Sheet. (Techniques developed by early American Accountancy Managers). The current contradicted the scientific guidance given by Europeans in counters can be called patrimonial Accounting. Later, the American theorists also proposed what was initially translated in Brazil by managerial Accounting (Management Accounting) in order to escape the rigidity of employees with accounting principles generally mandatory in Financial Accounting.
The Brazilian accounting initially sought to incorporate via legislation (Law 6.404/76), both elements of the financial school as the patrimonial. See for example, Article 178, caput of said legislation, which reads:
"On balance, the accounts will be classified according to the elements of the heritage that record, and grouped to facilitate knowledge and financial analysis of the company."
As for Brazil, it can be observed that initially practices of the two lines of study were adopted, with the targeting of equity as well as for financial goals.
Currently the Financial Accounting in the form which is followed by most of the worlds accountants refers not only to financial assets (money) because it refers to the accounts targeted to users outside the organization, and regulated by laws in defence of social interests.
By comparison, we can say that Managerial Accounting, by giving greater internal users of the company focus has greater freedom under the law and can enforce more precise accounting scientific principles.
Some features that are part of Financial Accounting:
Compliance with accounting principles;
Calculation of costs;
Determination of profits;
Review of the past;
Priority in the financial statements in relation to the financial statements. A new trend
With the changes in the accounting activities during the last decades of the twentieth century by the introduction of software management, both Managerial Accounting, Financial Accounting and Administrative Accounting, became part of what we call an Accounting Information System.