What are the advantages and disadvantages of financial statements
Advantages of financial statements:
1. Provide a snapshot of the financial health of a business.
2. Help investors and creditors make informed decisions.
3. Allow for comparison of financial performance over time.
4. Enable management to track progress towards achieving financial goals.
5. Provide transparency and accountability to stakeholders.
Disadvantages of financial statements:
1. May not always provide a true reflection of a company's financial position due to accounting policies and estimation methods.
2. Can be manipulated or misrepresented by management to present a more favorable picture.
3. May not capture all relevant information necessary for decision-making.
4. Do not always reflect the true value of intangible assets or intellectual property.
5. Can be complex and difficult to interpret for individuals without financial expertise.