What are Corporate Financial Statements (Report and Accounts) good for and what do they not tell you?
What are Corporate Financial Statements (Report and Accounts) good for and what do they not tell you?
Introduction
Accounting unlike finance is generally related to standard and rules , its main goals are to record , report and audit the accounting records of an organization. The science of accounting is precise and structured and touches such subjects as journal entries , invoicing , taxes , quarterly or annual financial reports . It is structured , precise and relatively easy calculated with the knowledge of certain formulas and data .
Finance on the other hand focuses its attention on monetary resources and the profitability of the organization , working closely with government agencies , stockholders , banks and suppliers .
This is the term where risk is taken into consideration , alongside market change , government decisions , price wars and customers indifference .(Conway B. (2013) )
Finance is a guide to accounting , like a pilot fish to a shark , one can not exit without the other . And while the formulas and statements might be useful and precise , without finance guidance accounting undoubtedly will face many drastic problems with little to no success of solving . Its major flow is reliance on said statements and formulas , with just accounting you can not see bigger picture .(Do you have competitors ? Probably , and what are they doing ?Are they better than you ? What should you do ? Why do when you face recession or price wars ? )
Advantages and disadvantages
Accounting as good a tool as it may be,still does not describe the market value of the firm .More often than not share price in the market are praised much high than accounts value them . Accounting does not carry out revaluation of fixed assets ( the increase or decrease of its carrying value , during drastic market changes ) For example if we take as a model the value of building . For an accounting it is initially valued as a cost of building , maintenance and resources it is made of
Introduction
Accounting unlike finance is generally related to standard and rules , its main goals are to record , report and audit the accounting records of an organization. The science of accounting is precise and structured and touches such subjects as journal entries , invoicing , taxes , quarterly or annual financial reports . It is structured , precise and relatively easy calculated with the knowledge of certain formulas and data .
Finance on the other hand focuses its attention on monetary resources and the profitability of the organization , working closely with government agencies , stockholders , banks and suppliers .
This is the term where risk is taken into consideration , alongside market change , government decisions , price wars and customers indifference .(Conway B. (2013) )
Finance is a guide to accounting , like a pilot fish to a shark , one can not exit without the other . And while the formulas and statements might be useful and precise , without finance guidance accounting undoubtedly will face many drastic problems with little to no success of solving . Its major flow is reliance on said statements and formulas , with just accounting you can not see bigger picture .(Do you have competitors ? Probably , and what are they doing ?Are they better than you ? What should you do ? Why do when you face recession or price wars ? )
Advantages and disadvantages
Accounting as good a tool as it may be,still does not describe the market value of the firm .More often than not share price in the market are praised much high than accounts value them . Accounting does not carry out revaluation of fixed assets ( the increase or decrease of its carrying value , during drastic market changes ) For example if we take as a model the value of building . For an accounting it is initially valued as a cost of building , maintenance and resources it is made of