A financial report is a summary of the finances of an organisation for a given period. It shows all the assets and liabilities on an organisation’s balance sheet, and also includes other information such as profit or loss and cash flow. Financial reports are used by organisations to evaluate their performance and make decisions. They can be produced for internal or external audiences, and are often regulated.
Financial reporting allows businesses to track the health of their operations over time, identifying trends and areas that need improvement. It can also help attract investment by demonstrating that a business is profitable and stable. Financial statements are essential for legal compliance, as they provide proof that a company has adhered to accounting standards and tax laws. In the US, for example, companies must provide quarterly income statements to the Securities and Exchange Commission (SEC) and file tax returns with the IRS.
To prepare a financial statement, accountants must first collect and organize all the relevant data from the reporting period. This information can include sales invoices, purchase orders, bank statements, expense receipts, and payroll records. Then they must add up all the amounts and make any adjustments required by accounting standards (e.g., depreciation methods). Finally, they must reconcile the beginning and ending accounting balances of all assets, liabilities, and equity accounts to verify their accuracy. To improve efficiency, some financial reporting software such as FineReport can automatically connect data from various systems and prepare financial reports with the click of a button.