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After years of doing their own bookkeeping and preparing all of their tax documents in-house, the Watkins BookStop is having a formal financial statement prepared. Write a short essay citing two possible reasons they would need a financial statement prepared.

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Adhikariariya123idn

Answer:

Most bookkeepers will prepare three major financial statements for your business—the profit and loss statement, balance sheet, and cash flow statement. It's a good idea to have updated financial statements every month, and then again at year end

Financial statements are the annual financial reports that every company needs to prepare at the end of the financial year to know the financial position of the business in the market.

Why do we need to prepare financial statements?

Financial statements play an important role in terms of providing information to investors because they can provide enormous information about a company's revenue, expenses, profitability, debt load, and the ability to meet its short-term and long-term financial commitments

There are three major financial statements: Balance Sheet, Income Statement, and Cash Flow Statement.

As per the information available, the firm would need to prepare the financial statements because their business would have expanded over the period of time and for the fulfillment of the interests of the stakeholders.

Thus, In this way, they can show the true financial position of the business in the market.

Learn more about Financial statements,

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