Financial Accounting

Financial Accounting

Companies operate to achieve varies goals. They may be interested in

providing a healthy work environment for their employees, in reaching

a high level of control, or making contributions to civic and social

organization and activities. However, to meet these goals, a company

must first achieve its two primary objectives: earning a satisfactory

profit and remaining solvent. If a company failed to meet either of

these objectives, it will not be able to achieve its various goals and

will not be able to survive in the long run. In order to show others

how well one company has performed, financial statement is necessary,

it is because " Financial statements are accounting reported used to

summarize and communicate financial information about a company. A

company's integrated accounting system produces three major financial

statements: the income statement, the balance sheet, and the cash flow

statement. Each of these statements summarizes specific information

that has been identified, measured, recorded, and retained during the

accounting process."

Basically, The financial statements and what they report are as

follows. The income statement (sometimes referred to as the " P&L" or

profit and loss statement) reports revenue and expense events that

occurred during the reporting period. A revenue minus expenses equals

net income (also referred to as profit or earnings). The balance sheet

reports the business's assets, its liabilities, and the owners' equity

in the business as of the last day of the reporting period. The

statement of cash flows reports cash inflows and cash outflows from

financing events, investing e...

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...s group would have interest in the substantial

contribution is made to the local economy by the enterprise together

with the local and national factors such as employment and

environment. Some of these issues are included in their financial

information and long-term strategy.

Overall, relevance and reliability are major characteristics of a

financial statement. Irrelevant information is useless; consequently,

the financial statement must be reliable and relevant in order to meet

the basic objective. Information must be accurate since they are

always influencing the decision of the users, and moreover relevant

accounting information is capable of making a difference in a decision

by helping users to form predictions about the outcomes of past,

present, and future events or to confirm or correct prior

expectations.