Financial Accounting and Reporting

What are the four basic financial statements?

Balance sheet, income statement (profit and loss statement), cash flow statement, and the statement of owner’s equity.

The entire purpose of financial accounting is the preparation of financial statements.

Financial statements communicate crucial information to four key audiences:

• Investors: Investors often seek financial reports before investing in a company.
• Shareholders: Shareholders have a stake in a company, so they need to understand its performance.
• Management: Financial statements tell company managers how well the company is performing and what is working well and what is not.
• Banks: Lenders or other financial institutions will most certainly require financial statements during a lending process.

Financial accounting is required by law for registered companies

Financial statements, including balance sheets and income statements, are legally required for registered companies and are included in a company’s annual report as a rule of thumb.

Why does financial accounting matter?

Financial accounting is a way for businesses to keep track of their operations and provide a picture of their financial health.

Reporting on a company’s financial transactions provides insight and transparency into a business’s financial position and operations, allowing them to make better-informed decisions.

If you need our help to setup effective financial reports for your business, get in touch with the team at DNACA. We’re well qualified to assist you.