Final answer:
Financial accounting involves providing information to support external investment and credit decisions.
Step-by-step explanation:
The area of accounting that refers to providing information to support external investment and credit decisions is financial accounting. Financial accounting involves preparing and presenting financial statements that are used by investors, creditors, and other external parties to make informed decisions about investing in or lending to a company.
Financial statements, such as the balance sheet, income statement, and cash flow statement, provide information about a company's financial performance and position. Investors and creditors rely on these statements to assess the company's profitability, liquidity, solvency, and overall financial health.
For example, when external investors are considering investing in a company, they would analyze its financial statements to evaluate the company's past performance, current financial condition, and future prospects. This information helps them determine whether the investment is likely to generate a favorable return while managing the associated risks.