What is the purpose of financial statements?
There are two main purposes of financial statements: (1) To report on the financial position of an entity (e.g. a business, an organisation); (2) To show how the entity has performed (financially) over a particularly period of time (an “accounting period”). The most common measurement of “performance” is profit. It is important to understand that financial statements can be historical or relate to the future. Accountability Accounting is about ACCOUNTABILTY Most organisations are externally accountable in some way for their actions and activities. They will produce reports on their activities that will reflect their objectives and the people to whom they are accountable.
