What is the main purpose of financial accounting?

The main purpose of financial accounting is to provide financial information to external users for decision-making purposes. This includes stakeholders such as investors, creditors, regulatory agencies, and the general public. Financial accounting captures the comprehensive financial health and performance of a business, ensuring that external parties have access to consistent and reliable data for assessing the company's viability and making informed economic decisions.

The focus of financial accounting is on creating standardized reports, such as income statements, balance sheets, and cash flow statements, that adhere to generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS). These standardized reports enable external users to compare financial information across different organizations and time periods effectively.

While the other options touch on important aspects of accounting, they do not encapsulate the primary aim of financial accounting. For instance, assisting management in making internal business decisions pertains more to managerial accounting rather than financial accounting. Calculating taxes, while a critical function, is a specialized task often requiring a different set of guidelines and purposes. Similarly, preparing reports exclusively for shareholders neglects the broader range of external users who rely on the financial statements. Thus, the emphasis on providing financial information for external decision-making solidifies the correctness of the selected answer.