Describe financial reporting and discuss how it is miused.

Introduction Financial reporting is the issuance of written documents in the form of the fiscal statements by the companies to the shareholders and other interested parties. The neutral of these monetary statements is to interpret data about the reporting entitys pecuniary performance and do that is mathematical functionful to the wide range of users for assessing the stewardship of the entitys heed and for making economic decisions.To be useful, this schooling must be represented faith sufficientyy, should be complete, prudential and free from material errors. The point of imposing regulations on method of accounting practices and setting standards is to fulfill the objectives of financial statements. Need for Standards and Legislation It was difficult for investors and other stakeholders to location reasonable comparisons between two or like loyals when no legislations were oblige or any standards set. To change this the companies act was introduced and imp lement in 1989. The accounting concepts are guidelines which ensure that a plastered is able to report its finances clearly and truthfully, giving an righteous account of the business at at a allow time. The accounting standards that followed the guidelines of this law included the principle of prudence, consistency, accruals and matching, and going parliamentary law in (approved code of accounting practice). These four concepts ensure that firms today stomach a foundation to improve their accounts reports.

Different users use financial statements for differents things.. Financial statements should allow a user to make predictions of forthcoming capital flows, make comparison with other companies and evaluate the manage! ments performance. Firms should add germane(predicate) and reliable information to its investors if it wants to be able to analyse its step to the fore and analyse it relating to its competitors. Comparisons on progress would be distorted and valueless if firms employ accounting policy at random. Financial information is imperative for the government to calculate... If you want to get a full essay, order it on our website: OrderEssay.net

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