Contribution of relevance and reliability on financial reporting Essay

Contribution of relevancy and reliability on fiscal account - Essay typefaceMain objective of accounting policy is to produce mediocre valued accounting information that is super reliable and relevant to the purpose and objectives of pecuniarys statement. Financial statements are the most important components of annual report that solely public limited companies publish each year for the stakeholders of the company. The monetary statements need to be the fair and good representation of financial details of all activities performed by the companies. Financial information is responsible for financial stopping point making by the investors, creditors, suppliers etc. Most important is investment decision making by the investors. So, relevance and reliability need to be two most important characteristics of financial statements of any organizations. These determine the theatrical role of financial reporting. Main objectives of financial statements are to provide fairly reported and audited financial information to the shareholders of the organizations. So, users of financial statements consider it as reliable and relevant sources for taking decision for any financial purposes like investment, credit, deliver etc. So, being a highly responsible for financial decision making, financial statements need to be relevant and reliable. ... So, all these external stakeholders of a company are highly reliable on its financial reporting which truly represents the companys actual value and performance. Internal purpose of financial reporting is to retain standardized record of financial activities done by the company in a fixture interval of time i.e. quarterly, half yearly and yearly. It helps the organizations to gauge its performance at the end of each financial year and also the end of each quarter of a financial year (FASB, p.15). Companies develop next business strategies based on the past performance of the company which contribute only be practical to e valuate from the financial reporting of past quarter or past financial years. Companies change strategies and be after for implementing new activities for next quarter and next financial years and they also develop budgeting for next financial years by analyzing previous years projection verses actual results. All these are possible because of maintaining fair valued financial reporting. (Narotama University, p.135). Financial statements published by the companies provide valuable information to the investors, shareholders, creditors, suppliers so that they can track the value with respect to time and uncertainty of a business entity. Future performance of a firm can be appreciateed by the future cash inflow and cash outflow into a business. The elements of financial statements like income statement, balance sheet and cash flow are very important to evaluate companys performance and financial health. Investors are the most important users of financial statements. From financial st atements, they assess the stewardship of management to an