Importance of Financial Statements for Best Practice

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Financial statements present an overview of the financial position of a company. For compliance with standards for best practices there are four statements which are usually prepared by companies. These are listed below:

Assets offer future economic benefits; Liabilities are obligations which can be settled using assets and Equity is best explained as residual interest which after liabilities have been deducted from the assets. Equity applies mostly to the owners of the firm. Consider the equation relating these three components of a balance sheet: Assets = Liabilities + Equity

Financial statements are a very important accounting component which must be taken seriously. It is an important tool for accounting processes for best practices in any bank and business organization.

Further reading: Corporate Governance | Audit | Performance Improvement

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