Income statement gamers has a lot of attention because it details whether your bussiness with some profit or loss. he cost of goods sold to gain precise assessment of the finencial health by your company and it is a paramount of your accuratey records sales and expense items etc.This helps in your plan making. On the income statement miscalculation can create many type of problems beyond just misinterpretation of earnings with poor allocation of resources and poor cost control. Income In properly recording sales results an error is a misleading net income figure. For valuing a business sales and net incomes are the basis. Miscalculatig sales leads to an incorrect valuation for business. As the finencial analysts says, accountant and lenders …show more content…
your business might overspend without having an accurate reading of your expenses. This is the result of poor operating efficiency. Some examples are a miscalculation of cost of goods sold, the amount of inventory your company sold for the time period, affects the net income and also affects ending inventory levels. Cash Flow Cash flows is the amount of mony and the company has at its disposal from some activities such as operating, investing and finencing activities. An income statement errors throws your cash flow, most notably in the section with cash flow from some activities such as operating activies. Lenders having a particular pay a greate deal of attention to cash flow from operating activities because it signifies how a company maintain itself to pay finencial obligations. Balance Sheet An inaccurate income statement flows throw the balance sheet of your company. Errors in depreciation expenses leads to an improper valuation with the plant of your company and equipment. Cash on the balance does not reflect the correct amount of cash that the company generated from the period. An error on the income statement affect many persons such as shareholders and company by itself. Therefore any miscalculation of net incomes is the result of any incorrect shareholders equity