A company's financial stability may be seen at a brief look due to the financial statements that reveal information about its operations, performance, and cash flow. The main goal of financial statements is to give information about an organization's financial situation, operating outcomes, and cash flow.
The primary goals of accounting are to maintain an accurate record of financial transactions, produce an expense journal, and prepare this data for reports that are frequently required by law. The recording of data is the most fundamental accounting function. Accounting is essential to starting a business because it makes it easier to keep track of income and expenses, ensures legal compliance, and gives investors, management, and the government access to quantitative financial data that can be used to make decisions.
The Financial statements are documents that describe a company's operations and financial performance. Government organizations, accounting companies, etc. frequently audit financial statements to guarantee accuracy and for tax, financing, or investing purposes.
Financial statements that must be provided are:
- income statement,
- balance sheet,
- statement of cash flows.
The process of combining financial data to make it transparent and understandable for all stakeholders and shareholders is referred to as accounting. Recording and reporting a company's financial transactions, financial performance, and cash flows is accounting's primary objective.
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