Bookkeeping is considered as the foundation step for financial reporting. Over the years financial reporting has become a business needs for almost all the businesses regardless of their size, industry, nature and organizational structure.

Following are the benefits of effective financial reporting:

Financial reporting enables the business to keep a thorough track of their financial performance over a period of time. Various financial statements are used to deal with different matters and a complete set of financial statement is capable of developing a thorough monitoring over the entire business.

Though decision making is based on various factors yet, financial accounting is one of the most important aspects to be considered. Financial statements can be a handy tool to assess various factors and contribute to decision making. Other investment appraisal techniques can also be derived from financial statements to assess an investment opportunity.

Financial statements are compulsory in some circumstances by law. They are also to be provided to various financial regulatory institutions for compliance purposes.

These statements are to be provided to a financial institution for applying for finance. Because they ensure the sound position of the company to be credit is to be provided.

In some cases where management and ownership of the company are separate. Financial statements are prepared to communicate the financial information of the business to their rightful owners. Because owners are not entitled to have a look in the books of accounts, this is probably the only mean of financial communication.

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