Question

Objective Type Questions :
State whether following statements are true or false :

Analysis of financial statement is a tool but not a remedy.

Answer 1

True

Explanation: Financial statements record financial transactions. However, the process of reviewing and drawing conclusions by evaluating Balance sheet and Profit and Loss Account is done through the analysis of financial statements. It is not a remedy; rather, it is a tool to evaluate results of business and helps in decision-making activity of the management. Analysis of financial statement gives the management an insight into the business and helps them in taking rational decisions.