What is Financial Record?
Financial record is the formal documents, which represents the transactions of a business, an individual or any other organization. Financial record is being maintained by companies including income statement, balance sheet, cash flow statement, statement of retained earnings, and tax returns. Keeping the financial record in an organized way is a key indication of a successful business. Such kind of record is required to present financial information of the company or an individual in a concise and clear manner for the stakeholders and shareholders.
Explanation of Financial Record
All of the financial information is required for the preparation of financial statements or any other record for financial reviews and audit. Books of accounts also help in order to contribute to the preparation of financial record such as assets and liabilities, general ledgers, and other supporting documents.
Generally, rules and laws enforce companies to maintain the financial record for the specific period of time. In the United States, it is the requirement of the SEC for the firms to retain financial records for reviews and audit for at least 7 years. According to the generally accepted accounting principle (GAAP), it is the standard practice for all businesses to present financial statements and to maintain the permanence of presentation and information in order to fulfill the requirement of GAAP.