Question

What are interim reports? Why is a complete set of financial statements often not provided with interim data? What are the accounting problems related to the presentation of interim data?

Short answer

Interim data are not reported for a short period. Problems of opportunity cost and fixed cost allotment arise in the presentation of interim data.

Step-by-step solution

Meaning Interim Reports

Interim reporting's primary goal is to give information that will assist investors, creditors, and other users in making informed investment decisions. It comprises not just financial statements but also additional ways of expressing information that is directly or indirectly related to the accounting system's information, such as information about an enterprise's resources, commitments, earnings, and so on.

Explaining the reason for a complete set of financial statements often not provided with interim data

A full set of interim financial statements is rarely provided since this information isn't considered critical during a short period of time; the income number, on the other hand, is far more relevant to interim reporting.

Explaining the accounting problems related to the presentation of interim data

The accounting issues related to the introduction of interim information are as takes after:

1. The difficulty of apportioning costs, such as income taxes, pensions, etc., to the proper quarter.
2. Problems with fixed cost allotment.