1. Financial accounting statements reflect events ...

1. Financial accounting statements reflect events or transactions which have happened in the past. In contrast, the management of any company is continually making decisions concerning what might happen in the future. How, therefore, can financial statements help management make such decisions? What dangers or problems can you identify in using past information to guide future decisions?
Financial statements:
The financial statements helps the managers to provide the overall financial position of a business, to provide this we have three major financial statement, they are:
1. The profit & loss account
2. The Balance sheet
3. The cash flow statement
1. Profit & loss account:
The profit & loss account helps the management to find out the net profit / loss for a specific period, it indicates how the revenue is transformed into net income, the main categories of profit & Loss are


Revenues


Expenses


Net Profit


2. The Balance Sheet:
The balance Sheet sometimes called the statement of financial position, lists the assets owned by a business and the liabilities owed to others. The balance sheet shows these balances at a specific date.
3. The cash flow statement:
Acash flow statementis afinancial statement that shows how changes inbalance sheet and income accounts affectcash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. The statement of cash flows is useful in determining the short-term viability of a company.
Cash flow statements include:


Accounting personnel.


Potentiallendersorcreditors.


Potentialinvestors.


Potential employees or contractors.


OBJECTIVES OF FINANCIAL STATEMENTS:
           Financial statement shows ever dimension of the business, it shows every details of the business such as, transaction, net profit or loss, gross profit or loss, wages records and other expenses and revenues.
            Financial statements is to provide information about the financial position, performance and changes in finance position of an entity that is useful to a wide range of users in economic decisions.
The users of Financial Accounting Statements:
They are classified as internal users and External users,
1. Internal Users:


Management


Employees


2. External users:


Shareholders, Investors & security Analysis


Leaders & other suppliers


Customers


Government regulatory agencies


The above parties demand ...