Do you think the value of transparency is important while preparation of financial statements of a company?

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Solution

Yes, the value of transparency is the key to the preparation of financial statements. All the material information should be disclosed in the financial statement as per accounting principles.

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M K Limited is a computer hardware manufacturing company. While preparing its accounting records it takes into consideration the various accounting principles and maintains transparency. At the end of the accounting year, the company follows the 'Companies Act and Rules, 2013' for the preparation of its Financial Statements. It also prepares its Income Statement and Balance Sheet as per the format provided in Schedule III to the Act. Its Financial Statements depict its true & fair financial position. For the financial year ending March 31, 2017, the accountant of the company is not certain about the presentation of the following items under relevant Major Heads and Sub Heads, if any, in its Balance Sheet:

(i) Securities Premium Reserve

(ii) Calls in Advance

(iii) Stores and Spares

(a) Advise the accountant of the company under which Major Heads and Sub Heads, if any, he should present the above items in the Balance Sheet of the company,

(b) List any two values that the company is observing in the maintenance of its accounting records and preparation of its financial statements.

Why is it important to adopt a consistent basis for the preparation of financial statements? Explain.

What do you understand by analysis and interpretation of financial statements? Discuss its importance.

Q. Briefly explain the importance of preparing financial statements.

Q. The valuing of assets at _________ principle for balance sheet is followed while preparing financial statements.

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