Question

Explain the difference between financial reporting and financial statements.

Short answer

Financial statements are results of the financial reporting process while financial reporting is the process to provide the necessary data to different stakeholders.

Step-by-step solution

Definition of accounting

Accounting is the process which start from recording of the monetary and ended on providing the useful data to the different users of the financial statements.

Difference between financial statement and financial reporting

Financial reporting is the process which provide the relevant information to the users of the accounting data. In financial reporting, many reports are prepared which also include the all-financial statements. Financial reports also include the management’s discussion and analysis, management letter, shareholders’ meeting and auditors reports which are not included in financial statements.

Financial statements are the outcome of performing financial reporting process. Financial reports include the very few statements as compared to financial reporting. These statements are income statement, balance sheet, cash flow statements, change in equity and notes to accounts.