Management Information System in Ed Admin Course Requirement

Asian Development Foundation College
Mana
geme
nt
Infor
matio
n
Syste
Submitted by:
ARIANNE C. LAMATA
m in
Educ
Submitted to:
ROGELIA K. FIRMO, Ph.D.
ation
al
Report: Advantages of Financial Report System (FRS)
3 Important Benefits of Financial Reporting

The benefits of financial reporting become obvious once you understand the purpose it serves
both inside and outside your company. Financial statements provide a vivid picture of your
company’s financial situation in real time. Staying abreast of your company’s finances can mean
the difference between success and failure.
Here’s one example of how sound financial reporting benefits your business. If you examine
your financial statements closely enough, you’ll know when you’re about to spend money you
don’t actually have and be able to stop yourself before you do any real damage. In better times,
this close scrutiny will alert you when you have enough money to invest in the growth of your
business.
Primary Financial Statements

There are three major financial statements– the income statement, the balance sheet, and the cash
flow statement. The balance sheet is the most fundamental of the three. It shows the relationship
between liabilities and equity, and how together they comprise your total assets. An “asset” is
any item that is owned or owed by the business. “Owners’ equity” is the amount remaining after
subtracting liabilities from the assets. This is the owner’s stake in the business.
The income statement is also called the “profit and loss” statement. It depicts the profitability of
the business during a specific time period. The cash flow statement shows the transformation of
finances from accrual form to cash form. The exchange of goods and accounts to cash is
considered the business’s cash flow.
Here are three important ways financial reporting can help your
small business.
1. Decision-Making Mechanisms
Financial statements give you great decision-making tools. They indicate business trends and
tendencies, showing how the firm is collecting money and at which rates creditors are being
paid. They also show any abnormalities that might interfere with the cash flow of your business.
For instance, accounts receivable reports depict who is paying the business on time and who is
paying late. You can then look at these reports to make educated decisions on who needs more
collection efforts or reminder notices, and which customers are more reliable. Accounts payable
reports show you what your business owes and to whom. Some reports can even help monitor
your inventory count and its valuation .
No matter what questions you might have about your business, proper financial reporting can
provide you with an answer. Try to follow the GAAP Finance Rules and Standardized Reporting
to ensure your financial reports are as accurate as possible. This is especially true if your
questions have to do with your inventory, debts, or profits. When looking to improve your
business, this information is invaluable.
2. Getting Credit When You Need it: One of the Key Benefits of Financial Reporting
Whether it’s part of a growth strategy or just a way to stay afloat and viable, every business
needs credit at one time or another. This includes business loans, credit cards, and credit lines
with vendors. All of these lenders will need some type of guarantee that they’ll get their money
back in a timely fashion. To get this guarantee, the lender will want to check your balance sheet
and credit report.
The balance sheet gives an accurate impression of how much you already owe, but it also shows
them the current state of your cash flow. As an aside, an internal accounts payable report will
keep you on top of your bills and help increase your credit score.
3. Financial Reports Help You Remain Compliant
Local, state, and federal agencies require you to submit quarterly tax returns, and you can only
prepare these if you have the proper financial statements. Here are some additional details
regarding financial reports and compliance:
 A sales report distinguishes between taxable and nontaxable sales and will help you calculate
the sales tax you owe.
 Payroll liability reports present the tax obligations you have associated with paying your
employees.
 In the case of an audit, you’ll have to provide any information related to filing your taxes. The
three primary financial statements usually fulfill this obligation, but the auditor may require
additional statements as well. Lastly, you must be able to back up this documentation with hard
copies of things like pay stubs and receipts.
Understanding the benefits of financial reporting is always the best way to motivate you to keep
good records. The key is getting started right away.

Management Information System in Ed Admin Course Requirement

Uploaded by

Copyright:

Available Formats

Management Information System in Ed Admin Course Requirement

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Management Information System in Ed Admin Course Requirement

Uploaded by

Copyright:

Available Formats

Asian Development Foundation College

3 Important Benefits of Financial Reporting

Primary Financial Statements

3. Financial Reports Help You Remain Compliant

You might also like