Question

In: Computer Science

Why is it important that financial statements and reports are clear and conform to organisational and...

Why is it important that financial statements and reports are clear and conform to organisational and statutory requirements? Discuss in 120–150 words.

Solutions

Expert Solution

in every business there is a pressing need to prepare and maintain financial statement due to following reasons:-
1)To take corrective actions to increase business:
clear financial reports/balance sheets reveals profit or loss in the business. In the case of loss corrective actions can be taken to cover the loss
2)To attract the investors:
If owner of the business knows about the profit/success of the business, it is not sufficient to attract the investors
All the profit/success/policies of the business should be well documented to prove the success of business. Therefore all the financial statements and reports can be used to convince the investors
3)Tax payment:
Every business organization is expected to pay various types of taxes to the government.
4)Business expansion:
To expand any business, it is necessary to decide the budget, targets to be achieved. All these things are only possible if all the financial statements and reports are well maintained.


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