Financial statements are the end products of the accounting process, prepared to communicate financial information to owners and external parties. Their significance is detailed below:

Firstly, financial statements report on the stewardship function. They communicate the performance of the management to the shareholders. This helps in understanding the gaps between the management's performance and the ownership's expectations.

Secondly, these statements act as a basis for fiscal policies. The government's taxation policies are related to the financial performance of corporate undertakings. Thus, financial statements provide basic input for industrial, taxation, and other economic policies of the government.

Thirdly, they help various users in decision-making. The users include shareholders, investors, creditors, lenders, customers, management, and the public at large. They provide data about general purpose needs of these members.

Lastly, financial statements are an integral part of the annual report. Along with the directors' report and auditors' report, they provide necessary information about management performance to interested parties for taking appropriate economic decisions.