Financial accounting refers to the figures, balances and accounts that a business must
produce to demonstrate how the business is performing. In a small business, such as a sole
trader or partnership, these accounts may be quite simple. However, they still need to be
accurate. This is so that the business owner/s and the tax authorities have clear information
about the costs and profits of the business. Once a business becomes a limited company,
there is a legal requirement to publish certain figures.