What does Financial Reporting mean? Meaning and Definition
Financial Reporting is the financial results of an organization that are released to the public. This reporting is a key function of the controller, who may be assisted by the investor relations officer if an organization is publicly held. Financial statements (or financial report) is a formal record of the financial activities and position of a business, person, or other entity. Also learn, Financial Reporting: Definition, Objectives, and Importance!
A firm communicates to the users through financial statements and reports. The financial statements contain summarized information on the firm’s financial affairs, organized systematically.
Preparation of the financial statements is the responsibility of top management. They should be prepared very carefully and contain as much information as possible. Two basis financial statements prepared for external reporting to owners, investors, and creditors are:
Balance sheet:
The balance sheet contains information about the resources and obligations of a business entity and about its owners’ interests in the business at a particular point in time. In accounting’s terminology, balance sheet communicates information about assets, liabilities and owner’s equity for a business firm as on a specific date. It provides a snapshot of the financial position of the firm at the close of the firm’s accounting period.
Profit and loss account:
The profit and loss account presents the summary of revenues, expenses and net income (or net loss) of a firm for a period of time. Net income is the amount by which the revenues earned during a period exceed the expenses incurred during that period.
More information is required for planning and controlling and therefore the financial accounting information is presented in different statements and reports in such a way as to serve the internal needs of management. Financial statements are prepared from the accounting records maintained by the firm.
Others things,
Statement of Changes in Equity or Statement of Retained Earnings: Reports on the changes in equity of the company during the stated period, such as a fiscal quarter or year.
Cash Flow Statement: Reports on a company’s cash flow activities, including it's operating, investing, and financing activities. These are typically referred to as sources and uses of cash.
Financial reporting typically encompasses the following:
If a business is publicly held, financial reporting also includes the following:
Meaning and Definition:
Financial Reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the organization over a specified period of time.
These stakeholders include - investors, creditors, public, debt providers, governments & government agencies. In the case of listed companies, the frequency of financial reporting is quarterly & annual. Financial Reporting is usually considered as the end product of Accounting.
Financial reporting is the disclosure of financial results and related information to management and external stakeholders about how a company is performing over a specific period of time.
A firm communicates to the users through financial statements and reports. The financial statements contain summarized information on the firm’s financial affairs, organized systematically.
Preparation of the financial statements is the responsibility of top management. They should be prepared very carefully and contain as much information as possible. Two basis financial statements prepared for external reporting to owners, investors, and creditors are:
Balance sheet:
The balance sheet contains information about the resources and obligations of a business entity and about its owners’ interests in the business at a particular point in time. In accounting’s terminology, balance sheet communicates information about assets, liabilities and owner’s equity for a business firm as on a specific date. It provides a snapshot of the financial position of the firm at the close of the firm’s accounting period.
Profit and loss account:
The profit and loss account presents the summary of revenues, expenses and net income (or net loss) of a firm for a period of time. Net income is the amount by which the revenues earned during a period exceed the expenses incurred during that period.
More information is required for planning and controlling and therefore the financial accounting information is presented in different statements and reports in such a way as to serve the internal needs of management. Financial statements are prepared from the accounting records maintained by the firm.
Others things,
Statement of Changes in Equity or Statement of Retained Earnings: Reports on the changes in equity of the company during the stated period, such as a fiscal quarter or year.
Cash Flow Statement: Reports on a company’s cash flow activities, including it's operating, investing, and financing activities. These are typically referred to as sources and uses of cash.
Financial reporting typically encompasses the following:
- Financial statements, which include the income statement, balance sheet, and statement of cash flows.
- Accompanying footnote disclosures, which include more detail on certain topics, as prescribed by the relevant accounting framework.
- Any financial information that the company chooses to post about itself on its website.
- Annual reports issued to shareholders, and.
- Any prospectus issued to potential investors concerning the issuance of securities by the organization.
If a business is publicly held, financial reporting also includes the following:
- The quarterly Form 10-Q and annual Form 10-K, which are filed with the Securities and Exchange Commission.
- The annual report issued to shareholders, which could be a stripped-down version that is called a wrap report.
- Press releases containing financial information about the company, and.
- Earnings calls, during which management discusses the company's financial results and other matters.
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