Financial statements?

Question

Why are financial statements like; Trial balance,balance sheet,profit & loss account essential to a company ?

Answer 1

Those statements measure the financial success of a company. They're necessary for income tax reporting and if the company needs to borrow money, it shows the net worth.

Answer 2

ok lets say I own a pizza shop. my expenses have to add up to my check book. or else some one is stealing from me. balance sheat is like. credits and debits. you add all the income. and all the debits. they have to add up or else there is an error. or typo in the math. I don't know trial balance. what is that? an estimate of, How it will work out later. when the paper work gets caught up?. ok lets think a trial balance. we know what balnce is
what is a trial a "test"?. maybe. like a double check. profit and loss is important. I would keep a graph to learn from. at the pizza shop they have it hour by hour believe it or not. day by day and month by month. its important so you can learn from it. such as. we don't sell too many pizza's at midnight. lets close down the shop at 11 pm . and see what the profit does. because we don't need delivery people standing around making $8 per hour to sell one pizza for a $3.00 profit per hour. so th answer is . you need them to study and learn how to make more profits in the futer.

Answer 3

Without that type of information, the management and investors can't tell if the company is making money or going broke.

It would be like running your life without ever looking at your paycheck stub, balancing your checkbook, or looking at any of your bills. You would have no idea what was coming in or going out.