Crash Course in Accounting and Financial Statement Analysis, Second Edition

Financial Reporting Overview

Financial information, which accounting helps to standardize, is presented in the companies’ financial reports.

U.S. companies must file periodic financial reports with the Securities and Exchange Commission (SEC). Why is this so?

The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it.

To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public, which provides a common pool of knowledge for all investors to use to judge for themselves if a company’s securities are a good investment.

Only through the steady flow of timely, comprehensive and accurate information can people make sound investment decisions.

—Securities and Exchange Commission