The Usefulness of The Accounting Financial Statements In The Present World Of Business
Accounting is one of the most important jobs in the world of business today. It takes care of the management of the finances in the organization as well as the manner in which the cash in the organization flows in and out of the organization. The main aim of preparing the accounting financial statements is to make the managers and the higher echelons of the organization of the true financial standing of the company at a give period of time. It also helps the external agencies in realizing the true financial potential of the organization that aids in their investment decisions in the company.
In general, the field of accounting is broadly divided into two main categories that are the management accounting as well as the financial accounting. The management accounting is meant only for the purpose of the internal managers and the other decision makers in the organization to help them in understanding the true nature of the financial situation of the company and thus take appropriate decisions based on the these reports. The other type of accounting is the financial accounting in which the accounting financial statements are created for the outside agencies in order to determine the correct financial standing of the company so that they can make the informed investment decisions. Some of the external agencies that use these accounting financial statements are the banks, the share holders, the stock holders and the investment agencies.
The accounting financial statements whether those of the management accounting or the financial accounting are the representation of the company’s performance over a specific period of time. It is important that the accounting statements are prepared by the expert accountants. In many cases, the external agencies, like during the times of the tax auditing, the government might like to have a look at the accounting financial statements to make sure that the company is keeping its books clean and free from various irregularities.