What is the primary objective of financial accounting?

The primary objective of financial accounting is to provide financial information about a company's performance to external stakeholders. This means that financial accounting focuses on producing standardized reports, such as income statements, balance sheets, and cash flow statements, that convey the financial health and performance of the organization to parties outside of the company, such as investors, creditors, regulators, and the public.

These external users rely on accurate and reliable financial information to make informed decisions regarding their investments or the creditworthiness of the business. The information must adhere to established accounting principles and standards to ensure consistency and comparability.

In contrast, guiding internal business strategy relates more to managerial accounting, which is used by internal management for decision-making, and tracking daily transactions is part of operational accounting rather than the financial reporting aspect targeted at external users. Additionally, managing payroll and employee benefits is more about human resource management and operational functions rather than the overarching goals of financial accounting.