| Definition |
Formal reports summarizing financial performance and position of a business. |
Detailed documents and ledgers recording daily financial transactions. |
| Purpose |
To provide stakeholders with a clear view of financial health. |
To systematically track and document all financial activities. |
| Components |
Includes Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Equity. |
Includes journals, ledgers, invoices, receipts, and vouchers. |
| Audience |
Investors, creditors, regulators, management, and external users. |
Primarily internal use by accountants and auditors. |
| Frequency |
Prepared periodically (quarterly, annually). |
Maintained continuously throughout the financial year. |
| Level of Detail |
Summarized and condensed information. |
Comprehensive and detailed records. |
| Legal Requirement |
Legally required for companies and public entities. |
Not usually required to be submitted externally but must be maintained for audits. |
| Accuracy |
Must be accurate and comply with accounting standards. |
Base source data for preparing financial statements. |
| Format |
Standardized formats guided by GAAP or IFRS. |
No fixed format; depends on company’s accounting system. |
| Use in Decision Making |
Used for strategic decisions, investment, and lending. |
Used for bookkeeping, audits, and financial control. |
financial statements vs accounting records