Accounting takes an important role in operating an organization.

Every business must

keep track of financial information that relates to its business activities. It also has numerous
processes; some simple, others complex and burdensome. But as the business grows,
acquires new customers, enters new markets and keeps pace with constant changes in
information technology, companies need to maintain highly accurate and up-to-date
accounting, inventory and statutory records. With a substantial increase in the volume of
accounting transactions and increase in exposure of information to errors due to complexity
of these accounting systems, there was a need for a system which could store and process
accounting data with increased speed, storage, and processing capacity. This led to the
development and introduction of accounting softwares. One of the processes involved in
these softwares are the presentation of computerized financial statements.
On the other hand, banks are financial intermediary that creates credit by lending
money to a borrower, thereby creating a corresponding deposit on the bank's balance sheet.
Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance
Italy but in many ways was a continuation of ideas and concepts of credit and lending that
had their roots in the ancient world. In the history of banking, a number of banking
dynasties notably, the Medicis, the Fuggers, the Welsers, the Berenbergs and
the Rothschilds have played a central role over many centuries. The oldest existing retail
bank is Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg
Bank.
Banking begins with the first prototype banks of merchants of the ancient world,
which made grain loans to farmers and traders who carried goods between cities. This
began around 2000 BC in Assyria and Babylonia. Later, in ancient Greece and during
the Roman Empire, lenders based in temples made loans and added two important
innovations: they accepted deposits and changed money. Archaeology from this period
in ancient China and India also shows evidence of money lending activity.
The origins of modern banking can be traced to medieval and early Renaissance Italy, to the
rich
cities
in
the
north
like Florence, Lucca,Siena, Venice and Genoa.
The Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing
branches in many other parts of Europe.] One of the most famous Italian banks was
the Medici Bank, set up by Giovanni di Bicci de' Medici in 1397. The earliest known state
deposit bank, Banco di San Giorgio (Bank of St. George), was founded in 1407
at Genoa, Italy. Modern banking practices, including fractional reserve banking and the issue
of banknotes, emerged in the 17th and 18th centuries. Merchants started to store their gold
with the goldsmiths of London, who possessed private vaults, and charged a fee for that
service. In exchange for each deposit of precious metal, the goldsmiths
issued receipts certifying the quantity and purity of the metal they held as a bailee; these
receipts could not be assigned, only the original depositor could collect the stored goods.
Gradually the goldsmiths began to lend the money out on behalf of the depositor, which led
to the development of modern banking practices ;promissory notes (which evolved into
banknotes) were issued for money deposited as a loan to the goldsmith. The goldsmith paid
interest on these deposits. Since the promissory notes were payable on demand, and the
advances (loans) to the goldsmith's customers were repayable over a longer time period,
this was an early form of fractional reserve banking. The promissory notes developed into an
assignable instrument which could circulate as a safe and convenient form of money backed
by the goldsmith's promise to pay, allowing goldsmiths to advance loans with little risk

of default. Thus, the goldsmiths of London became the forerunners of banking by creating
new money based on credit. (Wikipidea)
The banking sector is always deemed to be one of the most vital sectors for the
economy to be able to function. Its importance as the lifeblood of economic activity, in
collecting deposits and providing credits to states and people, households and businesses is
undisputable.
In all economic systems, banks have the leading role in planning and implementing
financial policy. The difference lies with prioritizing goals and their way of achievement.
Based on the neo-liberal model, achieving greater profits by using all means is an end in
itself, while in the socialistic systems bank operations also aim at improving economy in
general and at satisfying social needs. (Liakos)
There are various types of banks. The necessity for the variety among these banks is
because each bank is specialized in their own field. Each bank has its own principles and
policies. Different rates of interests are also noted among these banks. All these banks are
listed as below:
Savings Banks these banks are suited for employees with a monthly salary. Low waged
people may open an account in the savings bank.
Commercial Banks These bank collects money from people in various sectors and gives the
same as a loan to business men and make profits in interests these business men pay. Since
the loan is large the interest rates are also high.
Industrial Development Bank these banks are committed towards enhancing the growth of
industries by providing loans for a very long period of time. This is vital for the long term
growth of the industries.
Land Developments Bank these banks promote growth in the food sector, by giving loans
to farmer at a relatively lower interest rate. The loan is usually given on the basis of land. If
a farmer has lots of agricultural fields then the more will be the loan provided.
Indigenous Banks native banks. They are normal moneylenders; only this time, handling
huge amounts of money. They collect money from the community and provide loans to
business men and industrialists for a short amount of time.
Mortgage Banks these banks are specialized in providing mortgage loans alone. In order to
sell loans they depend solely on the secondary market.
Spare Bank these banks are present in Norway. They promote both savings and
commercial facilities to the both people and organizations in Norway.
Federal or National Banks these banks control the principles and policies of other banks
across the country. These banks are managed and run by the government. This bank
provides
benchmarks
which
other
banks
should
follow.
Co operative banks: co operative banks as the name suggests gets money from the general
community without any bias and provide loans to all sections of people in the neighborhood.
Their motto is not profit alone, but service.
Exchange Banks these banks will be available in more than a single country. They provide
services for the buying and selling of gold and silver; transactions will be in foreign
currencies.
Consumers Bank these are consumer friendly banks; they encourage the consumer in
buying commercial products and provide options for easy repay of the loan amount.
Community Development Banks these banks provide services to the community; where
there has been nothing or very little development over the years.

Credit Unions they act just like a co operative bank except that they provide services to
only one employee union in the community. Low interest rates and easy installment
paybacks
are
features
of
this
bank
Postal savings bank: these banks are oriented with postal services. People save money for a
defined period of time and are paid with standard interest rates.
Private Banks these banks are not for the general public or community. They serve entirely
for private personnels assets and transactions alone.
Offshore Banks they are also private banks except that they have little tax to pay for their
transactions; there is very little regulation for this bank.
Ethical Banks as the name implies ethical banks promote candid transactions; between
various customers of the bank. Policies and rules are transparent in nature.
Internet Bank provides banking facilities only via internet. There will be no physical contact
with the bank. All transactions are permitted only through online.
Investment Banks these banks are pertinent to large organizations investment ventures
across the industry. They provide advice in the investments and promote corporate
transactions.
Merchant Banks these banks exist for a long time. They promote investing in organizations
that reap huge benefits for a long time rather than brand new organizations.
Universal Banks these banks have a wide spectrum of financial assistances to provide.
Insurances to stocks, they promote everything across all countries around the globe.
Islamic Banks these banks are based on the principles of the religion Islam. There are no
interests for loans acquired from this bank. Service charges may apply.
(http://typeslist.com/different-types-of-banks/)
The first bank established in the Philippines was the El Banco Espaol Filipino de
Isabel 2. It was founded in August 1, 1851 and was also considered as the first bank in
Southeast Asia. Its actual operations began in 1852. This bank was established twenty-three
(23) years after Ferdinand VII (King of Spain) issued a decree in April 6, 1828 to establish a
public bank in the Philippines.
The Spanish governor and captain-general of the Philippine Islands, Antonio de
Urbiztondo led the organization of this first bank in the Philippines. The bank was established
as a limited stock company the same as with the contemporary state banks in Europe at
that time. Its first office was located in Intendencia which is now called Intramuros. The
confraternities managed the funds of the bank and the invested capital to be spent in
secular activities like underwriting cargoes for the galleon trade.In January 1, 1912, the bank
was officially renamed into Bank of the Philippine Islands (BPI).
(: http://www.affordablecebu.com/load/banking/the_first_bank_in_the_philippines_el_banco_e
spanol_filipino_de_isabel_2/13-1-0-3140#ixzz3ljJBuRye)

Like any other firms in the business world, banks also use financial statements to a
picture of how current business models are running and whether they are profitable.
Financial statements can include information on capital expenditures, business income,
business trends, cash flow, company balance sheets and how cash is handled. (by Crystal
Vogt, Demand Media)
Owners and managers use financial statements to make important long-term
business decisions. For example: whether or not to continue or discontinue part of its

business, to make or purchase certain materials, or to acquire or rent/lease certain

equipment in the production of its goods.
Source: Boundless. Uses of the Financial Statement. Boundless Finance. Boundless, 21 Jul.
2015. Retrieved 15 Sep. 2015 from https://www.boundless.com/finance/textbooks/boundlessfinance-textbook/financial-statements-taxes-and-cash-flow-2/introducing-financialstatements-31/uses-of-the-financial-statement-177-1000/
For the smooth operation of the organization, the managers and owners need
the financial reports essential to make business decisions. So as to provide a more
comprehensive view of the financial position of an organization, financial analysis is
performed with the information supplied in the financial statements. The financial statement
is used to formulate contractual terms between the company and other organizations.
A variable of the financial statement like the current debt to equity ratio is important
in deciding the amount of long term capital that would be required to be raised. The financial
statements of other companies can also provide investment solutions to different
companies. Sometimes it becomes difficult to decide the right field in which financial
resources may be channelized. In such situations the financial statements of other
companies provide the appropriate guideline.
Management of any business requires a flow of information to make informed, intelligent
decisions affecting the success or failure of its operations
Financial statements are vital for making crucial business decisions. You should be reviewing
more than just your bank statements whenever you are considering whether or not you can
afford to invest money back into your business. Financial statements will give you a clear
and accurate visual of how your business is currently performing, so you have a means of
monitoring its progress and identifying opportunities for growth.
(http://www.startinvoicing.com/news/financial-reporting/why-it-is-so-important-to-prepare-)
The success of a business often depends on the success of its financials. Analyzing
your company's financial statements will give you a better idea of the financial health of
your business. This financial picture can include information about liquidity, leverage and
profitability, and will better guide your management strategy for reaching your company's
goals
and
objectives.
(Crystal
Vogt )