Information about accounting policies assists financial readers in better interpreting a company’s financial statements. It is given in ___

Balance sheet

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Statement of profit & loss

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Notes to accounts

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None of these

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Solution

The correct option is C
Notes to accounts

It is given in notes to accounts.

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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.

Q. Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.
From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.
(I) Capital Reserve
(ii) Calls-in-Advance
(iii) Loose Tools
(iv) Bank Overdraft

Q. Notes to financial statement about law suits, contractual commitment etc. are required to be shown in the financial statement by way of footnote or in notes to accounts under which of the following principles?

Accounting provides information about the profitability and financial soundness of a concern. In addition,it provides other valuable information also. However,accounting has certain limitations. Explain any three such limitations.

Q. Accounting is a process of recording, classifying, summarising, analysing and interpreting the financial transactions and communicating the result thereof to the users of such information. State whether the statement is true or false.

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Information about accounting policies assists financial readers in better interpreting a company’s financial statements. It is given in ___

The correct option is C Notes to accounts It is given in notes to accounts.

The correct option is C
Notes to accounts

It is given in notes to accounts.