Financial reporting is the process of presenting an organization final financial report in accordance to the Generally Accepted Accounting Principles (GAAP). Financial reports are prepared for both external and internal users. Financial reports prepared include the statement of cash flow, income statement and balance sheet. It is a legal requirement for companies to publish its financial reports at the end of every financial period usually annually and quarterly.

Financial reporting is a compulsory field of study for business accounting students. Our team is well versatile with different financial reporting standards and has rich experience in academic writing. Our main focus is to provide financial reporting assignment help to students that will assure them good grades at the end of their coursework.

Purpose of financial reporting

The general purpose of financial reporting is to reflect the true financial performance of a company. Management is able to make informed strategic decisions with the aid of financial reports. The management can easily pinpoint the areas of strengths or weakness and devise appropriate course of action. Third parties like the government, creditors and shareholders also use the financial reports to safeguard the interests of their final decisions. This means that the financial reports control the relationship between the company and outsiders.

Generally Accepted Accounting Principles (GAAP)

It is a requirement by the international financial reporting standards that financial reports especially of firms in the same industry should be comparable with each other. GAAP lays down the standards and procedures that should be followed in presenting the financial reports. It is a legal requirement that financial reports of a company are prepared in accordance to Generally Accepted Accounting Principles. There are more than forty GAAP standards, some of the most common include:

  1. Accrual accounting principle

According to this principle, revenues and expenses are recorded when incurred regardless if cash is exchanged or transaction is made on credit. The objective is to accurately allocate revenue or expense to the period in was earned or incurred. Common accruals include depreciation, inventory, accruals and prepayments.

  1. Historical cost convention

The historical cost convention requires that original cost of an asset to be recorded when preparing the balance sheet. This is despite the lifetime of the asset or the accrued depreciation that has been incurred.

  • Going concern concept

The going concern concept assumes that the company life is continuous at the time of presenting the financial reports. This means that the company is in a position to meet its current debts when they fall due. Violation of this accounting concept will mean that the business will have to be liquidated in order to meet the creditors’ obligation.

  1. Consolidated financial reports

In a case of a group company which is made up of a parent company and various subsidiaries, the company statements should be prepared on consolidated basis. The final financial report therefore combine all the subsidiaries plus the parent company and present it like a single entity.

 

Annual reports for a company

The annual financial report is made up of three main documents, they include the following;

  1. Directors report

This forms the first part of any financial report and is inform of a letter from the director to the shareholders. This letter addresses three main issues which are; directors comment on the performance, assessment of the immediate future and company policies and strategies developed to address the future challenges.

  1. Financial statements

The second part of the financial report consists of the financial statements. Each financial statement is accompanied by footnotes or explanations of items contained thereof. The notes provides with a detailed explanation of the company accounting policies and how the company handle different financial items. The main financial statements include:

  1. Balance sheet- representing the company financial position at a specific time by reporting capital, assets and liabilities.
  2. Income statement- showing the income or loss made by the company in that period
  • Cash flow statement- this is a report of significant cash flows that have an effect on the company cash balances.

 

  1. Audit report

The auditor report is an indication that the financial reports have been prepared in accordance to the set accounting standards and that the financial statements is a reflection of true position of the firm. It’s a requirement to include an auditor report in order to eliminate cases of misleading financial reports.

 

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