Financial Statements                 

As discussed earlier, accounting is the art of summarizing, analyzing and interpreting the business transactions. All the accounting transactions are summarized in such way that they facilitate the preparation of "Financial Statements". Financial statements are the statements, which present the information relating to a company's current financial position, operating results, and other information used by the stakeholders to assess the company's performance.

Generally, financial statements are prepared in a certain format by following certain rules. It facilitates the users to compare different companies and their financial performance. These financial statements are prepared by following the legal system of the country i.e., by following GAAP of that country. If the company is a multinational company, it should prepare its financial statements separately by following GAAP of different nations. It is difficult for the companies to follow different GAAP for the same set of accounting records. The International Accounting Standards Board (IASB) is trying to standardize accounting rules. It has developed International Financial Reporting Standards (IFRS) for uniform reporting. Australia and the European Union have already adopted these standards. The USA made a commitment to converge the US GAAP to IFRS over time.

In India, according to Section 210 of the Companies Act, at every annual general meeting the board of directors is required to submit an annual report to the shareholders. As per Section 218 of the said Act, they should be issued, published and circulated to the relevant parties.