Accounting reports are the periodic statement that is used to represent the company’s financial status at a specific period of time further it tells the details of the business transactions and operations. They are said to be a compilations of financial information that are derived from accounting records of any organization. They are usually considered to be equivalent to financial statements.
These financial statements or accounting reports briefly includes:
Income statement- This record states the sale that is earned during a period of time and the loss which company faces thus it is known as profit and loss report. It is commonly used report that judges the overall performance of a business.
Balance sheet- This report shows the ending assets, liability and equity balances as of balance sheet date. You can say it is a snapshot of business at a specific time. This report is used to measure the liquidity and financial reserves of a company’s business.
Statements of cash flows- As the name, this report states the flows of cash related to operations, financing, and investment means both the out and in of cash flow. This report helps in achieving the most accurate result for cash generating ability of any organization or company.
Now going through till now, you may understand its importance for running a successful business. Further let’s discuss in brief about its purpose and importance for organization.
Purpose of Accounting records or financial statements-
It is one of a most important element of business as they are useful in maintaining and tracking a company’s record related to transaction, cash flow, income etc. Apart from tracking and maintaining record it helps in reducing the risk of reporting inconsistencies. You may go through with loss if these inconsistencies are identified by investors or other authorities, thus is helpful in avoiding them at the best cost.
Accounting reports helps in comparing the current situation with previous one and thus one can forecast its business health. You can then objectify your vision of financial situation and enables top management to make better decisions for sale, investments, purchases etc. In this filed you can take a help of accounting software that will help you in easier way and provides a visualization of information related to finance.
As in conclusion, we can sum up that accounting reports play a major role in providing the transparency of financial record by knowing the inflow and outflow of cash that is considered the most import report for any business and ultimately helps the accountant in well running of bookkeeping.