We explain what a financial statement is and the types of information it collects. Also, what are its features and various functions.
These types of reports are particularly useful in administrative , accounting, regulatory or management tasks, as well as being of interest to shareholders, creditors, taxpayers or owners. Therefore, they are prepared following specific accounting methodologies and standard accounting standards for financial information.
In this sense , they are prepared by public accountants : those professionals in the sector who are recognized and authorized by current local legislation to carry out financial investigations and correctly prepare financial statements.
See also: Balance sheet .
The financial statements also provide their readers with information regarding the different financial contexts in which the organization operates, such as market conditions or economic trends that are useful in forecasting and planning its future behavior.
The information displayed in the financial statement must always be relevant to the various contexts of the organization's action, considering various possible edges, for example, the interests of investors, the strategic guidelines of the company , etc.
The financial statements must be the product of specialized professional investigations , and not of subjective appraisals or speculations. They must be truthful and verifiable. For this they are prepared by accounting specialists.
Every financial statement is provisional, that is, it is an unfinished job that presents partial and up-to-date results , which are due to the need to make "cuts" in the life of the organization in order to diagnose its finances correctly.
In many countries, companies are obliged to render accounts to the State through frequent financial statements, through commercial registries and other types of control institutions. In this way , changes in the organization's patrimony can be faithfully known and possible cases of illicit management, corruption or evasion of taxes and responsibilities can be attended to.
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