Financial statements are designed to provide information about the financial position performance and financial adaptability of
... It is their job to make sure that the business is profitable and that they are able to provide financial information for the management of the business, or who ever requires it (i. ... Accountancy consists of three stages to be able to product the information needed above, these are: i. ... summarising the results of points (i) and (ii) to produce statements useful for control and decision making. ... Financial accounting is interested in the transaction that are happening between the business and other businesses in the rest of the world i. ... It was not unknown that some companies would also make and provide misleading accounts, using certain grey areas in the rules to bend the rules. ... The Accounting Standards Board has a definition of what a financial statements objective is, ‘the objective of financial statements is to provide information about the financial position, performance and financial adaptability of an enterprise that is useful to a wide range of users in making economic decisions.’ The financial position of a company is shown using a balance sheet. ... The performance of a company is measured in the amount of profit or loss that the company will make over a period of time. ... The financial adaptability of a company, is the ability of the company to generate cash so this will be the payments by customers and outgoing payments for expenditures i. ... When all these three statements are put together then it is referred to as the financial statement of the company. The users of the financial statements would be people who have to make economic decisions about the company i. ... Banks will use the information on the financial statement to see whether it is viable to lend the company money and that they will be able to pay it back on time. So if they financial statements are to be of any use then they must be both reliable and relevant. This is why the Accounting Standards Board has a statement of Principles to follow whenever a financial statement is done.