Essay about Purposes of Measuring and Reporting Systems for Companies

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1. There are three key measuring and reporting systems for any company. Describe each of these and their purpose:
Cash Flow Statement:
A cash flow statement is a month by month statement of anticipated cash in against cash out. They assess the amount, timing and predictability of cash inflows and cash outflows and are used as the basis for budgeting and business planning. It provides a sharper picture of a company's ability to pay creditors and finance growth. Each section of the cash flow statement will give insight into your business activities and where your cash came from or where it went to. (Lutt, 2012)
The purpose of the cash flow statement or statement of cash flows is to provide information about a company's gross receipts and gross payments for a specified period of time. The gross receipts and gross payments will be reported in the cash flow statement according to one of the following classifications which are operating activities, investing activities and financing activities. The net change from these three classifications should equal the change in a company's cash and cash equivalents during the reporting period.
Profit and Loss Account:
A profit and loss account is one of the financial statements of a company and shows the earnings and the expenses for the company over a given period. A profit and loss account starts with the Trading Account and then takes into account all the other expenses associated with the business. (Riley, 2012). The trading account…