Financial Statements and the Need for Accuracy in Financial Reporting and Statements
Generally speaking, when it comes to a business concern, no matter the size and kind of business that they run, for the owners and all who may be associated with the business one way or another, the need for accurate financial statements is one thing that cannot be assumed. Accounting is the language of business and as such to be successful in business, there has to be a fair understanding and appreciation of the need for accuracy in the financial reports and statements concerning the business.
Talking of some of the pertinent financial statements that your business will require, regardless of the size of the business, are such as the Income Statement, Balance Sheet, Cash Flow Statements, the Statement of Comprehensive Income and Statement of Shareholder’s Equity. By and large, the importance of these statements is one thing that cannot be underestimated just as we have already mentioned even looking at the fact that they play such an integral role in the business like the fact that the information that they reveal will be used for making decisions, advice on the next plans to make, assess the success of the business so far, know where their shortcomings may be and as well are used by the outsiders who may be interested in a deal with the business such as the investors who may be interested in the particular concern. Below is a quick review of some of the reasons why it is so important for you to ensure that there is as much accuracy in your financial statements as a business.
One of the major reasons why it is important to ensure as much financial statement accuracy is the need to ensure there is as much of financial transparency in your business and its reports. Numbers matter in your balance sheet and never ignore even the slightest of these for even the smallest of these can have such an impact on your business. For instance, you need to know of the fact that prudence in accounting will advise that you provide for the depreciation of assets in order to have accurate reports on your financial statements at the end of the year and as such the assets are not supposed to be reported to have the same value one year down the line from the last financial reports or date of purchase. At the same time, revenue earned should be well captured in terms of those that were actually realized in cash and those that happen to be forming the accounts receivables. The profits as well need to be reported clearly for these are as well a point of interest to the shareholders and management and as such, report clearly the profits before tax, after tax and after interest.