Financial Accounting Reports - Assignment Example

Financial Accounting Reports A consoli profit and loss ment determines the profits or loss that an entity has incurred over a set out It is used by entities to show indirect expenses that a company has incurred, and this can be used to make key decisions in the company (Gillespie, 2011). The statement is utilized by businesses to show the performance hence this tracks the performance of a business. The statement is also used as a basis for forecasting, as decisions can be made based on previous performances.

In the company, if a venture leads to a loss, the company is sure to compensate for itA balance sheet is among the key financial statements utilized by accountants and owners of businesses to show the financial balances of an entity. It represents the financial balances of assets, liabilities and shareholder equity as per the end of a set out date. This document is therefore important as it helps financiers to be informed of the fiscal status of a company in the event they want to invest in it.

It also allows creditors to value a company in terms of what it owns and what other entities owe it, and this way they can work out on a plan to inject money into the business or not (Averkamp, 2014). The balance sheet indicates the solvency of an entity as it shows how much assets are available to pay out liabilities the business has incurred thus a business is in a good position to make decisions that involve spending.Bibliography Averkamp, H. 2014. Introduction to Balance Sheet. Accounting Coach.

Accessed [http://www.accountingcoach.com/balance-sheet/explanation/1]Gillespie, A., 2011. Foundations of Economics. New York: Oxford University.