PURPOSE OF FINANCIAL STATEMENT
PURPOSE OF FINANCIAL STATEMENT
DEFINATION:
Financial Statement is the record of financial activity of an individual or business concern”.
In other words,
It is the report of financial institution which describes the financial position of business concern.
INTRODUCTION:
Financial statement shows the company’s performance for whole financial year. It also shows the company financial position for whole of the year. It shows the financial health of the company after one or half year. It includes the income statement, balance sheet of the company. Some time it shows the cash flow statement of the company. The financial statement of the company may be compiled after the half, quarter or one year. It includes these statements which are as under,
- Balance Sheet
- Income Statement
- Cash Flow Statement
- Statement of Retained Earnings
PURPOSES OF FINANCIAL STATEMENT
There are some purposes of preparing financial statement which are as under,
- It plays a major role in decision making of financial institution.
- It shows the current and future operation changing.
- It also helpful in collective bargaining agreement purpose.
- It also helpful investing in financial institution.
- It also helpful in making investment decision in any financial company.
- It also helpful for company current financial position.
- It shows the financial company profit & loss situation.
- It also helpful for income tax purpose.
- It also helpful for financial position of company into general public and media.
- It also helpful in measurement of company financial strength.
- In tax return financial statements are also helpful for company.
- It provides the complete information for outside parties.
- It is the formal presentation of company cash flows.
- It also helpful in making credit decisions.
Tags: Assets of Financial Institution, Financial Activity, Financial Stability, Financial Statement, Income Tax and Sales Tax, Investment Decision Making, Purpose of Financial Statement, Statement of Retained Earning