what are the two requirements of an accounting report
Answers
Accounting reports are periodic statements that present the financial status of a company at a certain point in time, or over a stated time-period. It details the business transactions and operations.They are a compilation of financial information that infer from a business’ accounting records.
Their nature varies, as they can be brief or custom-made with a specific purpose: detailing sales per region, the profitability of a product, etc.
Usually, accounting reports are considered to be financial statements which include:
– a balance sheet: it is a snapshot of a business at a specific time, and shows the ending assets, liability and equity balances as of the balance sheet date. It is useful to measure the financial reserves and liquidity of a business.
– an income statement: is also known as profit and loss report. It details the revenue earned over a certain period of time.
– a cashflow statement: as the name states, it is a statement of the flows of cash both in and out. It details the sources and uses of cash in relation to a business’ operations, investments and financing. It is often considered as the most reliable source of information when it comes to the cash-generation capacity of a firm.