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Description
The checking of financial performance in a business deserves much attention in carrying out finance function. It requires retrospective analysis of operating period for the purpose of evaluating the wisdom and efficiency of financial planning. Analysis of what has happened should be great value in improving the standards, techniques, procedures and functions. Financial statements are prepared primarily for decision making. Financial statements, also called as financial reports, are account balances arrayed in effective and meaningful order so that the facts and concepts they portrayedmay be readily interpreted and used as a base for decisions by all people who are interested in the affairs of business. The term "Financial Statements" as used in modern businesses, refers to the two reflecting the assets, liabilities and capital as on a particular date and income statement or profit and loss statement, showing the results achieved during a certain period which are prepared at the end of accounting year for a business enterprise. It has become a practice, particularly in case of large companies, to add a third statement of retained earnings.
