Financial Statements Are So Popular With Different Users Essay

Financial Statements Are So Popular With Different Users Essay

Length: 1470 words (4.2 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Accounting information is a fundamental part of accounting it allows businesses to know where they financially stand, imagine a world without financial statements how would companies and organisations function? Financial statements are like gold in the financial world and are significant in the accounting industry. With an ever evolving world financial statements are now available on the web for anyone to download, in this assignment I will be examining why financial statements are so popular with different users. Additionally, I will also look at how financial statements differ from country to country looking at the global perspective and how this can be a problem and how we can tackle the issues faced globally.

There are two sides of accounting; Management account (internal) and Financial Accounting (external). Management accounting is used intensely on a daily basis inside a business and the accounts are prepared monthly. The data used in management accounting is intended for use inside the business only. businesses use this data on a daily basis, helping a company plan and make decisions. Earlier I asked if we could imagine a world without financial statement, the answer to this is no. Financial statements are a key part of accounting, and an essential part of a foundation of an organisation, without it how would we know how much money we made, how many products we sold, what we could do in order to keep the company afloat and functioning well. The purpose of financial statements is to show the financial position of a business using historical and current data to summarise how well a business is doing, it’s performances and changes in financial position & if the business is making money. In accounting there are four main fina...

... middle of paper ...

... same can be said for depreciated assets, though the figure may not be exact, but they must not be undervalued. It’s important that when preparing the financial statement, you are not biased as there are implications such as errors in the financial statement.
in the US it is against the law and you can be fined for obvious overestimation/underestimation. (, 2016). However, there are instances when overstating/understating isn’t done deliberately and estimating accurately, the concept of prudence is meant to get rid of bias, so there is no evident fraud. Under the accruals concept income/revenue and expense must recognize and account for a transaction/sale for a particular accounting period even if there was no payment made. To ensure that expenses match the revenue earned an adjustment is made at the end of the year (Wood and Sangster, 2005).

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The Reason Of The Firm 's Financial Statements

- Introduction Financial statements are very important to a company because they measure a company’s performance. This performance statement can be viewed by the owners, possible investors, and lenders. This statement can make or break a company and is important that it is completed correctly. A Financial statement includes income statement, balance sheet, and statement of cash flows. In this essay I will describes the reason of the firm’s financial statements. Income Statement Purpose The income statement is the one of the most important and a large part if the financial statement....   [tags: Generally Accepted Accounting Principles]

Better Essays
732 words (2.1 pages)

What Makes A Business Thrive? Essay examples

- What is it exactly that makes a business thrive. Is it the popular line of production being sold. The quality of customer service. The manner in which the industry is organized. Indeed, these attentions have a significant role in a corporation, but most importantly just how well is a company running. Hence, the financial statements are the key element in any business. This provides information to shareholders, investors, and more especially to its managers, because these individuals are the ones to understand and communicate the performance of the company....   [tags: Income statement, Financial statements]

Better Essays
1327 words (3.8 pages)

Financial Losses Due to Fraud Essay

- In 2013, over $21 billion was lost to fraud nationwide, it is considered the fastest growing crime and is perpetrated in nearly every country in the world. Fraud can come in many different forms, from identity theft to the thousands of different scamming tactics used. In its essence, fraud simply refers to deceiving or cheating someone in order to make money or get personal gain. Last year 11,571,900 people became victims of fraud. Fraud is by far the most devastating and expensive crime in the world, and it continues to surge on in full force....   [tags: fastest growing crime]

Better Essays
1409 words (4 pages)

The Hybrid Cloud Is A Popular Tool For Thousands Of Companies Essay

- The hybrid cloud has become a popular tool for thousands of companies that require different cloud solutions for different tasks. This type of cloud solution makes use of both public and private cloud for one organization. This means a company can use the public cloud for simple tasks such as their emails, yet use the private cloud for other projects, such as customer information, payment information and more. There are a host of benefits to making use of hybrid cloud within your organization to help you achieve the best end results, improve productivity and ensure the highest level of customer service and support at all times....   [tags: Cloud computing, Data management]

Better Essays
724 words (2.1 pages)

Essay on Financial Report On Financial Statements

- 1. Financial statements are divided into two main categories which are general and special purpose financial reports. As for the general purpose financial reports, the major users are owners, shareholders, managers, customers, the general public and so on. Turning to the special purpose financial reports which are usually required by lenders, government and creditors. These reports need to record different information for different user’s need. Profit is the most significant element for the owners because they would like to know it from the Restaurant Brands Ltd (RBD)’s statement of comprehensive income....   [tags: Financial statements, Balance sheet]

Better Essays
1017 words (2.9 pages)

Essay on Financial Statements And Financial Statement

- Every Number Tells a Story Financial statements can provide a wealth of information about a given organization. These statements provide information about the company’s financial position, cash flows, operations, performance and changes in the financial position. This information may be used as part of the decision making process for employees, shareholders, investors and competitors. Based upon these financial statements, key ratios are used to provide additional insight as to the financial health of a given company....   [tags: Income statement, Financial statements, Cash flow]

Better Essays
880 words (2.5 pages)

Essay on Financial Statements Of A Company 's Annual Performance

- “Companies’ Annual Reports have become increasingly complex over the years, sacrificing understandability for complexity”. An annual report is a detailed report for shareholders and other business partners on a company’s activities throughout the year. It is a legal requirement from the Companies Act 1985/9 that requires companies to publish their annual report and accounts. Its purpose is to present a true and fair view of the company’s annual performance and provide financial statements that are useful to existing and potential investors, shareholders, lenders and other creditors....   [tags: Financial statements]

Better Essays
1067 words (3 pages)

Financial Statements And Its Impact On Our Lives Essay

- In our society the role of accounting continues to have an impact on our daily lives whether it is budgeting our homes, managing a business, or investing. In every aspect of business we are surrounded by decisions that circulates around the concepts of accounting. Accounting has gained the reputation of being the language of business. I believe that accounting has earned this reputation due to its function of being an information system that measures financial activities, assist in data reporting, and the measuring of performance within a business (Harrison, 2014)....   [tags: Financial statements, Income statement]

Better Essays
1686 words (4.8 pages)

Implementation Of Interim Financial Statements Essay

- II. CORPORATION Structuring your company as a corporation provides additional benefits when compared to a partnership however it also creates more challenges. A corporation can be a more complex entity that requires specific documentation such as articles of incorporation and minutes of board of directors and stockholder meetings. Another challenge are the reporting requirements of a publicly held corporation. Two of these requirements are interim reporting and segment reporting. B. INTERIM REPORTING....   [tags: Income statement, Financial statements]

Better Essays
2039 words (5.8 pages)

International Financial Reporting Standards : International Accounting Standards

- Ignacio Pigna ACG2071 Honors Project Professor Balmori 04/15/15 Honors Project International Financial Reporting Standards (IFRS) in the United States is a set of accounting standards developed by a not-for-profit organization called the International Accounting Standards Board in order for the financial information of non-governmental entities to be fair and honest. The standards released by the IFRS apply to companies that issue publicly traded debt or securities, and many other business entities as well....   [tags: Balance sheet]

Better Essays
1394 words (4 pages)