The Purpose of Annual Reports

Annual Reports

Financial reports are financial documents that provide an accounting summary of an organization’s activities. Financial reports are usually prepared by a public company’s accountant and presented to members of the board or to the shareholders at a general meeting. There are also versions that are to be submitted to regulatory bodies and to courts as pleadings in legal proceedings. Financial reports are also prepared for prospective investors who are evaluating a business. It is used in making a decision on whether or not to invest in the business and on what price to set its price.

There are different types of financial statements and records. The most common ones are annual reports which summarizes an individual’s or an entity’s income and assets for a given period of time. Other types include sales and profit and loss statement, cash flow statement, and balance sheet reports. The accounting standards for preparing financial reports vary from country to country depending on the country’s regulations. Generally speaking, however, financial reports are always prepared according to the requirements of the country’s legislation.

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The primary principles on which financial reports are generally accepted accounting principles are stated in the GAAP (Generally Accepted Accounting Principles). These principles generally include the recognition of the income of the business and the treatment of financial transactions for tax purposes. The process of accruing debt is also considered to be the source of revenue for the business. The sources of revenue for the business can be internal (such as sales made by the business to customers) or external (such as money received from a government agency). The income of the business is also determined through a comparison of net sales to the cost of good sold.

The Purpose of Annual Reports

A company’s financial statements are prepared based on the information provided by the owner, less any adjustments done by management. This means that the owners must have adequate information on which to base their financial statements. The company’s management team will make necessary adjustments in order for the financial statements to be prepared in line with GAAP (Generally Accepted Accounting Principles). It should be noted that the main goal of financial reporting is to provide reliable and accurate information to meet the objectives of the company. As such, most financial reporting requirements are quite specific.

Government agencies such as the government departments are tasked with checking and evaluating all the financial reports that companies are required to submit to them. GAAP requires that companies provide audited financial reports on an annual basis. Government agencies are very strict when it comes to finical matters and do their own in-depth checks and balances. In the end, companies must be able to provide accurate financial reports so that government agencies can easily determine their capacity to produce income that the country can use and benefit from.

The financial reports that a company must submit to GAAP are very detailed. All transactions in the year are reflected in the financial statements. All the financial reports must be prepared in line with GAAP (Generally Accepted Accounting Principles). Most financial statements will follow the standard format that is commonly used by most business establishments. These yearly reports are prepared to comply with the GAAP (Generally Accepted Accounting Principles).