Financial accounting primarily addresses the needs of which type of stakeholders?

Financial accounting is primarily designed to provide information to external stakeholders. These stakeholders typically include investors, creditors, regulators, and potential business partners who need reliable financial information to make informed decisions regarding their relationship with the business.

The core purpose of financial accounting is to produce financial statements—like the income statement, balance sheet, and cash flow statement—that offer a clear view of an organization's financial performance and position over a specific accounting period. This information helps external parties assess the company's profitability, financial health, and cash flow situation, which are critical for investment and lending decisions.

In contrast, internal stakeholders, such as management and employees, often utilize managerial accounting, which focuses on detailed reporting and analysis tailored to facilitate internal decision-making and operational control. While government agencies do rely on financial accounting reports for regulatory purposes and tax assessments, they represent a subset of the broader group of external stakeholders who need this financial data for diverse reasons.