Final answer:
The process of identifying, measuring and communicating economic information is called financial accounting. Financial accounting involves recording, summarizing, and reporting financial transactions in accordance with GAAP. It provides users with valuable information to assess a company's financial performance and make informed decisions.
Step-by-step explanation:
The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information is called financial accounting. Financial accounting involves the recording, summarizing, and reporting of financial transactions in accordance with generally accepted accounting principles (GAAP).
Financial statements, such as the balance sheet, income statement, and cash flow statement, are prepared based on the information gathered through financial accounting. These statements provide users, including investors, creditors, and other stakeholders, with valuable information to assess the financial performance and position of a business.
Financial accounting is crucial for decision-making, as it helps users understand the financial health of a company and make informed choices based on this information.