Meaning and types of bank accounts
Category: Concept of the Bank and the Banking System
The main purpose of bank statements — to be a source of reliable, complete and rapid economic information on the activities of the bank. Bank statements should be clear to existing and potential investors and lenders to give them an idea of the amount, time and risks associated with expected revenues, to provide information on the composition and types of resources involved, their location, availability of reserves for possible loan losses, etc. .
Management of modern banks based on the use of quantitative information, which is expressed in monetary units. In this case, financial statements may also include qualitative information (not money) if it helps the analysis of accounting reports. Statements, specially prepared to help managers, refers to the managerial accounting information. It is used in the process of planning, executing and controlling the activities of the bank.
However, it must be borne in mind that the accounting information is used by conventional classification, tentative assessments and in this sense is approximate. For example, reflected in the balance in conventional loan by multiple prolonged loans with a high degree of conditionality reflects the ratio between the urgent and overdue loans. A similar reflection on the passive reserve fund of the bank is not a sign of their presence in liquid form.
Thus, despite the «aura of precision, which, as it may seem, surrounds financial statements, indicators and their significance can only be approximate. In this regard, a great responsibility for correct use of reporting lies with its user, who must be able to adequately interpret and apply it when making decisions. He must understand it and determine what records and how, in what area of use.