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Importance of Maintaining Accurate Financial Statements - Research Paper Example
Author : collierletitia
Finance & Accounting
Pages 4 (1004 words)
Importance of maintaining accurate financial statements Name Institution Importance of Maintaining Accurate Financial Statements Introduction Financial statement is a record of activities of a business entity or persons. Financial statement is kept to gage the performance of the business and for auditing purposes…
The paper will explore why accurate financial statements are important for outside business interests Customers Customers are external parties that deal with the company by purchasing its products and services and are therefore interested in the financial statement of a company that needs to be accurate. Customers would be interested in the accurate financial statement for them to be able to know how the company spends its funds and manages its debts. Accurate statement of financial position and statement of comprehensive income will show the customers how the company is performing in terms of the profits the company makes relative to the debts it incurs, or the amount the company spends on its marketing strategies in comparison with operations (Horngren, Harrison & Oliver, 2012). A customer would be interested in the financial statement for them to be able to gage whether the company is profitable and would continue as a going concern. If the financial statement reflects that the company may go under receivership, the customer may get a good picture and strategies on where they will get their products in case the business collapses a\s reflected in the financial statement. ...