Financial statements and accounting Essay Example | Topics and Well Written Essays - 1500 words

Financial statements and accounting - Essay Example Financial statements and accounting Firms may also prepare other types of statements such as the statement of retained earnings. Financial statements are required to be audited by authorized government agencies so as to ensure the accuracy maintained in the statements for tax purposes. Auditing helps to estimate whether the table revenue has been correctly been identified by the firms. Audited financial statements are also referred by different other firms, banks and individuals for taking decisions regarding investments. It is important that organizations follow all existing norms are regulations established by the regulatory authorities while preparing such statements. The financial statements are prepared by referring the detailed records maintained in the journal, ledger, trail balance and other books and statements of primary and secondary entry. These records are then presented in the financial statements in a summarized manner. Entries which have earlier not been passed in the primary and secondary books of acco unts are recorded in the final statements by preparing an adjusted journal proper. Such entries have their impact upon both in the income statements as well as the balance sheet. Accounting statements are generally prepared using the U.S. Generally Accepted Accounting Principles (GAAP) in most nations across the world. Many nations are also seen to follow the IFRS principles. More and more nations across the worlds are adopting the IFRS principles. At present, approximately 110 nations of the world adhere to the IFRS principles.