3. Why are Accounts Necessary?
Business organizations communicate with us through financial statements. ‘Us’ here refers to lenders, customers, and investors [Users of Financial Statement].
All companies prepare financial statements. Listed companies need to publish their financial statements. There are 4 major financial statements i.e. Income statement, balance sheet, cash flow statement, and Stockholders’ equity. [ We will be studying them in detail, later in the course].
These statements reflect what is going on in the organization in terms of numbers. These are periodic reports that listed[one’s listed on stock exchanges- BSE and NSE in India] companies publish on a quarterly basis.
This information is useful in making good business decisions. For investors and customers to invest money in the company they have to analyze companies financials to reach a sound decision.