CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF
THE STUDY
Financial reports provides an overview of a business
profitability and financial condition in both short and long term. They are
necessary sources of accounting information about companies for wide variety of
users. In. every business, there, needs information. This information needs
ranges from financial, production, marketing etc. Generally, the larger the
organization the greater the management need for information. Financial report
plays a vital role in decision making process of business organizations. The
main purpose of financial repots is the provision of financial information as a
record making. It has been said that accounting is the language of business. It
might also be said that the ability to apply accounting knowledge is critical to
success in business: A business prepares various report at the end of each
fiscal period. This report summarizes the changes that have taken place during
the period. For this financial report to be useful, the data be presented in
such a way that the user will recognize, Similarities, differences and trends
form one period to another to enable them make decisions. The accounting
information contained in the financial reports enables management to make more
inform decisions. Financial report should provide adequate information in all
areas of organization and economic activities; it should be able to disclose
clearly the nature and accurate accounts of the transactions fun which the true
and fair view financial position of the organization can be ascertained.
Financial reports serve a lot of useful purpose to different users namely,
shareholders, Creditors, Banks, government agents, employees, potential
investors and the management of the