Financial accounting software is a part of accounting software system that keeps tracking of company's financial transactions.
Companies use financial statements to show outside the company their financial performance, for example, to creditors, investors, suppliers, and customers. Creating external statements and reports is one of the essential distinctions financial accounting software from managerial accounting software that is designed to prepare detailed reports and forecasts for company's managers working inside the company.
Financial reports are a broader concept than financial statements.
Software providers study in details the legal requirements and financial accounting standards established by both the U.S. Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to meet the US internal and external financial accounting and reporting standards.