Is financial reporting and financial statements the same?

Financial reporting and financial statements are related concepts in accounting but refer to different aspects of financial information disclosure.

Financial Reporting

Financial reporting includes the broader handle of communicating financial related data almost a company’s financial related execution and position to outside partners, such as financial specialists, leasers, controllers, and the common open. It includes the planning and introduction of different financial reports, counting financial explanations, nearby supplementary revelations like administration commentary and investigation.

Financial report serves a few purposes:

1. Transparency: It gives straightforwardness into a company’s financial related wellbeing, execution, and financial position.
2. Decision-Making: Partners utilize financial reports to form educated choices approximately contributing, loaning, or giving assets to the company.
3. Compliance: It guarantees compliance with bookkeeping guidelines, administrative necessities, and revelation commitments.

Financial Statements

Financial statements are particular records inside the broader system of financial reporting. They are formal records of the financial related exercises and position of a trade, presented in an organized arrangement. The most sorts of financial statement incorporate:

1. Balance Sheet (Statement of Financial Position): Appears the company’s resources, liabilities, and value as of a particular date, giving a depiction of its financial related position.
2. Income Statement (Profit and Loss Statement): Reports the company’s incomes, costs, picks up, and misfortunes over a indicated period, regularly a financial quarter or year.
3. Cash Flow Statement: Summarizes the company’s cash inflows and surges amid a period, categorizing them into working, contributing, and financing exercises.

Key Differences

Whereas financial statements are a significant component of financial reporting, financial reporting itself incorporates extra components such as:

• Management Discussion and Analysis (MD&A): Gives management’s investigation of the financial situation related to financial conditions, and future prospects of the company.

• Footnotes and Disclosures: Incorporate extra data almost bookkeeping approaches, dangers, possibilities, and other significant subtle elements.

In quintessence, financial statements reporting is the comprehensive preparation of unveiling financial related data to outside partners, enveloping financial statements as a center component. Financial related explanations, on the other hand, are particular archives that show financial data in an organized organization, centering on key viewpoints of a company’s financial performance and position.