Financial Accounting Reports - Assignment Example

This is mostly done by measuring and monitoring the performance of agents. After measuring and monitoring, the results is the then reported to the interested parties. In most cases, financial accountancy is used during the preparation of accounting information for the outsiders of the organization. However, it is not used for the daily operation at the company (Alexander 2008, 76). Financial statement is generally a formal record that defines financial activities of a particular organization, business entity or even a person.

In most cases, the relevant financial information is usually presented in an effective manner and in a simple form to enable the user having less difficulty in understanding it (Alexander 2008, 97). The different forms of financial statements include a balance sheet, cash flow statement and an income statement (Alexander 2008, 97). In this case, the balance sheet normally reports on some of the liabilities, assets and ownership equity of the organization while the income statement mostly reports on the organization profits and expenses over a certain time.

On the other hand, the cash flows statement mostly reports on some of the organization’s cash flow activities including financial and operating activities (Gray 2006, 49). Financial statements are supposed to be understandable to its readers. Alternatively, different users mostly use the statements for various purposes. Some of the common users of financial statements include; owners and managers, prospective investors, employees, organizations, and financial institutions (Eijffinger 2012, 72).

Managers of organizations and owners mostly require financial statements in making crucial decisions regarding the business. These financial statements are mostly used as part of organization’s annual report especially to the stockholders. Additionally, employees may sometimes need these reports while making collective bargaining agreements. Most of these agreements are