What is the primary purpose of financial accounting?

The primary purpose of financial accounting is to provide financial information to external users. This aspect of financial accounting is crucial because it equips stakeholders such as investors, creditors, and regulatory agencies with the necessary data to make informed decisions regarding the financial health and performance of a business. These external users rely on standardized financial statements, like the income statement, balance sheet, and cash flow statement, which offer a clear snapshot of a company's financial position and operational results over a specific period.

In contrast, tracking internal business performance is more closely associated with managerial accounting, which focuses on providing information for internal decision-making rather than for external reporting. Preparing marketing strategies and managing human resources are functions that pertain to different areas of business operations and do not align with the specific goal of financial accounting.