Financial Statements versus Financial Reporting
Financial statements are records of all financial activities of a company and are prepared in a structured manner so as to be easily understood. Or otherwise, financial statements are short documents that present the income information for a business at any given point in time. Financial statements are therefore generated several times throughout the year to provide accountants and financial advisors and planners within the business with financial information, so they can plan and budget accordingly. Owners and managers also require financial statements to make important business decisions that affect its continued operations.
A financial report, also often referred to as financial reporting or annual report contains much more than mere financial statements though the basic purpose is to provide all relevant information about the company to all stakeholders. It is also a large collective document that summarizes the financial spending and earning of a given business over the duration of a single year. Once a year, normally at the end of the fiscal year, all of the financial statements are added up to create the income information for a financial report. Company owners use the financial reports as a method of attracting potential investors, shareholders and stockholders to the business. Since the financial report is a compilation of several financial statements for a given year, the investors and holders are able to see the changes in the company’s net worth, statements in cash flow and an operational balance sheet.
This table shows whether to provide general purpose of financial statements or a special purpose of financial reports according to the business.
|If business is, | | |Community-based, for example and incorporated society, or charitable |Must...