Which of the following is a characteristic of 'financial accounting'?

Financial accounting is characterized by its adherence to statutory requirements and established standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). This regulatory framework is essential because it ensures that financial statements are prepared consistently and transparently, which enables stakeholders, including investors, creditors, and regulators, to make informed decisions based on comparable and reliable data. The emphasis on accountability and compliance with legal requirements distinguishes financial accounting from other forms of accounting, such as management or cost accounting, which focus more on internal decision-making and future planning.

While internal management decision-making is important, it pertains more to management accounting rather than financial accounting. Financial accounting primarily aims at providing a clear historical record of a company's financial activities for external users. The use of budgetary information is also associated with management accounting, where variance analysis and budget planning play a crucial role. Similarly, the focus on future projections is a feature of planning and forecasting, which falls under strategic management practices rather than purely financial accounting. Thus, the defining characteristic of financial accounting is its regulation by statutory requirements and standards that dictate how financial transactions and reporting should be conducted.