Financial Report and Its Relevance to Investment Decision

INTRODUCTION: Financial reporting is the process of recording, evaluating and communicating financial information where as investment involved the allocation of resources to investment proposal whose benefit can be derived in future. Shareholders and investors are concerned with value of their investment and any income they expect to drive from shareholdings. Financial reports give them an account of how directors have handled resources given to them. The company Act specify directors’ emoluments, personal interest in contracts showing shareholders what personal benefits directors have derived from the business. Shareholders may exercise their voting rights on what is shown in the accounts especially when they vote for the appointment†¦show more content†¦Therefore, management still does not pay much attention to the needs of having adequate and useful information before attempting to make an economic decision. IV- Since historical cost method is used throughout the financial often open surfaces during the inflationary period as figures may easily mislead decision makers. 3. OBJECTIVES OF THE STUDY I- The cardinal objectives of this work is to find out how significant, useful and important is the company’s financial report and statements or information on investment decision. Managers, shareholders, creditors and other interested group seek answers to the following question about a firm: what is the financial position of a firm at a given point in time? How has the firm performed financially over a given period of time? What have been the sources and uses of cash over a given period of time? To answer these questions the following statements have to be considered: balance sheet, profit and loss account, and cash flow statement II- to determine and find out the extent to which the company’s financial information and transaction are prepared and reported, and III- to find out the accounting principles and conventions adopted in the preparation of financial statement. IV- to find out who is responsible for the false information. 4. RESEARCH HYPOTHESIS 1. Financial report is the most reliable tool for a goodShow MoreRelatedFinancial Accounting Essay1139 Words   |  5 PagesFinancial accounting is one kind of accounting different from the management accounting in the accounting system. As management accounting is for â€Å"internal† whereas financial accounting is for â€Å"external†. The following is a detailed explanation and analysis of the major objective and role of financial accounting. 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