Identify the Main Users of Financial Reports

In: Business and Management

Submitted By emadcsh
Words 1075
Pages 5
A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity .
Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements.
• Income Statement: reports the results of operations for a specific period of time.
• Retained Earnings Statement: reports the changes in retained earnings for a specific period of time
• Balance Sheet: reports the company's financial position at a specific date.
• Statement of Cash Flows: reports the case receipts and payments for a specific period of time.

The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions. Financial statements should be understandable, relevant, reliable and comparable. Reported assets, liabilities, equity, income and expenses are directly related to an organization's financial position.
Financial statements are intended to be understandable by readers who have a reasonable knowledge of business and economic activities and accounting and who are willing to study the information diligently
The users of financial statements use financial statements for a large variety of business purposes and their ability to understand and analyze financial statements helps them to succeed in the business world. The various users of financial statements can be classified to INTERNAL USERS and EXTERNAL USERS and detailed as follows : Internal Users
• Owners and managers require financial statements to make important business decisions that affect its continued operations. Financial analysis is then performed on these statements to provide management with a more detailed understanding of the…...

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