Financial statements are made for external reporting. These statements can be used for the..................also.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Internal needs.
The financial statements generally include two statements: balance sheet and statement of profit and loss which are required for external reporting and also for internal needs of the management like planning, decision-making and control. Apart from these, there is also a need to know about movements of funds and changes in the financial position of the company. For this purpose, a cash flow statement is prepared.