Question

"In business, accounting and financial statements are the means for communicating the numbers. If you don't know how to read financial statements, you can't really know your business"

Answer 1

Accounting and financial statements are crucial for understanding a business's financial performance and position.

Step-by-step explanation:

In business, accounting and financial statements are essential tools for communicating the financial performance and position of a company. Financial statements provide a snapshot of a company's financial activities, including its revenues, expenses, assets, and liabilities. By analyzing financial statements, business owners and stakeholders can gain valuable insights into the financial health of the company and make informed decisions.

For example, the income statement shows the company's revenues and expenses over a specific period, allowing business owners to determine if the company is generating a profit or incurring losses. The balance sheet shows the company's assets, liabilities, and shareholders' equity, providing a snapshot of the company's financial position at a specific point in time.

By understanding how to read and interpret financial statements, business owners can gain a deeper understanding of their company's financial performance, identify areas for improvement, and make informed decisions to optimize profitability and growth.

Answer 2

The statement is: True.

Step-by-step explanation:

Accounting is the activity by which companies record their economics transactions so they can analyze what the flow of the business is and take more educated decisions on what operating course to follow. The results of the accounting activity of an organization are summarized in its Financial Statements.

Managers must have the ability to know how to read that document otherwise they will not be able to identify the improvement areas of the firm neither the factors that can be exploited to maximize profits.