CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Financial statements according to Meigs and Meigs (1981:28) refers to reports which summarize the financial position and operating results of a business (balance sheet and income statements). It referred to as general purpose that satisfy the need of many groups generally called stakeholders. These groups are particularly concerned with the risk inherent in and returns provided by their investments, and who require accounting information to enable them assess the ability whether they should buy, hold and sell their investments. According to Anayaogu (2002:14) financial accounting provides information to eternal decision makes such as shareholders government, creditors, employees etc., these are people with whom or from whom money is ultimately paid or received.
Anayaogu (2002:20) also states that records of financial accounting statement include various ledges accounts, profits and loss accounts, balance sheet and other financial records. These records are intended to show the strength, progress, portability, management effectiveness and stewardship. Financial statement are the means of communicating to interested partners information or the resource, obligation and performance of the reporting enterprise in a simple, clear and understandable form to all its user with such attributer of relevance to decision reliability, consistency and comparability materiality efficiency and understandability.
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