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2. Why Accounting Reports Are Crucial For
Developing Businesses?
Accounting is a branch of commerce and it deals with the study of all
recorded financial and management transactions which have been made
by a particular organization. One of the prime tools used in this study
are accounting reports. Accounting reports are nothing but files which
holds all financial details of a company’s account records. It is mainly
used to check the financial stability of an organization and the profit
gained by a company and evolution of the same through a period of
time. Each and every report can vary since they can be brief or custom-
made based upon their respective purpose.

3. What are the components of accounting reports?
An accounting report mainly consists of three subparts, and they are
balance sheets, income statements and cash flow statements. These three
components of accounting reports are described below:
 Balance sheets
 Income statements
 Cash flow statements

4. Balance sheets & Income statements
• Balance sheets:
Balance sheets are mainly used to analyse the financial stability of a
company through its reserves. In other words, it gives an image of a
business’s present scenario that is, its debts and credits. Henceforth, it
can be said that a balance sheet describes about the company’s equity.
• Income statements:
The most important part of an accounting report is income statements.
This part gives an overview of an organization’s sources of revenue and
the profit and loss statements. It also helps to take necessary steps to
make a worsened situation of a brand much better, by increasing
efficiency to generate more profits.

5. Cash flow statements
• Cash flow statements:
These are statements usually describes about the various investments
and purchases made by an organization. This document keeps an
accurate record of the usage of financial sources of a company.

6. Accounting web

7. What is the purpose of maintaining account
reports?
As can be understood, accounting reports are one of the most important
tools in order to maintain the stability of a company and achieve higher
goals in future. Apart from this, an accounting report has several other
purposes, some of which are stated below:
• To make an assessment of a company’s present financial scenario
• Provide a statement of the total amount of money that can be invested
• Helps to reduce the risk of unstable investments, and
• Manage ineffective financial decision making

8. What are the benefits of maintaining these
documents?
Apart from giving an accurate image of an organization’s financial health
and the several activities related to it, there are several other advantages
of maintaining good accounting reports. Some of these advantages are
stated below:
• Reduce tax-related responsibilities:
Accounting reports helps to remind one about the exact expenses made
by a company. Hence, they are not bound to pay more than what they
have bought, thereby also reducing the tax amount attached to those
expenses. A person does not have to stress and fuss about remembering
what purchases he/she made on behalf of a company and thereby pay the
exact amount that he/she needs to pay.

9. • Gives an overview of an organization’s expenses:
Accounting reports give an overview of a company’s treasury and thereby also states the
amount that can be invested in future, along with whether the company is making a
profit or running on a loss, and how to recover the losses ,a company has already made.
This gives an organization fuel in order to reach its goals by right decision making.
• Additional employment::
An accurate accounting report also helps an organization to make additional
recruitment. Without proper statements a company cannot recruit new employees and
therefore, proper accounting reports are a must.
• Helps to track an organization’s growth:
These reports give a visual representation of an organization’s development since its
foundation via various graphs and statistical representation.

10. • Helps to create year-ending reports without a hassle:
Creating a year-ending report is one of the most hectic jobs that a person may go
through. However, if an organization maintains precise accounting reports then it
becomes an easier and less time-consuming process for the person who is creating the
annual reports. This may be called as a backup of all monthly financial reports.
• Consumes less time during auditing:
When an organization is going for auditing, an auditor will ask the business head to
provide all the necessary financial documents. If the head is able to produce all these
documents with accurate information then the auditor will take much lesser time in
completing the process.

11. How do accounting reports help developing
businesses?
Businesses which are on the verge of development or those who are going through a
stage of development need to maintain accurate accounting reports compared to
leading companies since they are on the way to make themselves a part of the globally
known business industry.
• A trusted advisor:
The primary source on which an organization works is financed and in order to
maintain this source a company needs a trusted advisor, and as commonly known
paper is always trusted more than a friend and thereby, these reports will help a
company to make right and needful investments, recover losses, investment for
promotion of the company and in many more ways.
• Money saving procedure:
As said earlier, accounting reportshelps to save unnecessary and overinvestment of
money which is a very crucial point which each and every developing business should
keep in mind. In short, it helps to manage cash flow.

12. Created By :
Lennon John
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