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* Financial reporting is a way of recording, analysing and summarising financial data.
* Financial data refers to the actual transactions carried out by a business e.g sales of goods, purchase of goods, payment of expenses. These transactions are analysed according to type, recorded in ledger accounts and summarised in the financial statements.
* Financial reporting is as such a method of reporting the results and financial position of a business. It is not primarily concerned with providing information towards the more efficient running of the business. Even though financial accounts are of interest to management the main function of financial reporting is to provide historical information needs of persons not involved in running the
business. Information produced is mainly for external users.
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