The reports to be prepared for investors are called financial statements, their preparation being the task of financial accounting

3. It is necessary that a balance sheet should disclose the resources that are under a company’s control on a specified data and indicate where revenues have come from.

4. Being shown in the income statement for a particular time period, net income is the accountant’s term for the amount of profit.

5. The company’s success is measured by the amount of profit it earns, that is, the growth or decrease in its stock of assets from all sources except contributions or funds withdrawn by owners and creditors.

6. The purpose of the statement of cash flows is to explain management’s use of the financial resources available to it and to help in evaluating the company’s liquidity and its ability to pay its bill.

While net income increases retained earnings, net operating loss or the distribution of cash dividends reduces it.

To enable users to interpret statements with confidence, companies in similar industries should use the same measurement concepts and principles.

Most accounting data and reports are likely to be generated mainly for the company managers.

Preparation of data and reports either summarizing past events or disclosing forecasts of the future is expected to be the task of managerial accounting.