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Question
What are financial statements? What information do they provide?
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Solution
Financial statements are those statements which are prepared for reporting to decision-maker on the basis of trial balance containing balances of ledger accounts. These are prepared to throw light on the financial results of operation of business during the period under consideration and the financial position at the end of the period. In financial accounting through financial statement profit is measured in two stages, i.e. Gross profit and Net profit.
To ascertain the gross profit, trading account is prepared and to ascertain the net profit, P&L account is prepared. To report on financial position of business enterprise, its assets, liabilities and owner equity balance sheet is prepared. Financial statements are the statements, which present periodic reports on the process of business enterprises and the results achieved during a given period.
Financial statements include Trading and Profit and Loss account, balance sheet and other statements and explanatory notes, which form part thereof. Information provided by financial statements is useful to management to plan and control the business operations. Financial statements are also useful to creditors, shareholders and employees of the enterprise.
Information Provided by Financial Statements
Trading and Profit and Loss account present a true and fair view of the financial performance of the business in the form of profit or loss during the year.
Balance sheet presents a true and fair view of the financial position of the business.
In financial accounting through financial statement profit is measured in two stages, i.e. Gross profit and Net profit.
To ascertain the gross profit, trading account is prepared and to ascertain the net profit, P&L account is prepared. To report on financial position of business enterprise, its assets, liabilities and owner equity balance sheet is prepared. Financial statements are the statements, which present periodic reports on the process of business enterprises and the results achieved during a given period.
Financial statements include Trading and Profit and Loss account, balance sheet and other statements and explanatory notes, which form part thereof. Information provided by financial statements is useful to management to plan and control the business operations. Financial statements are also useful to creditors, shareholders and employees of the enterprise.
Information Provided by Financial Statements
Trading and Profit and Loss account present a true and fair view of the financial performance of the business in the form of profit or loss during the year.
Balance sheet presents a true and fair view of the financial position of the business.
To ascertain the gross profit, trading account is prepared and to ascertain the net profit, P&L account is prepared. To report on financial position of business enterprise, its assets, liabilities and owner equity balance sheet is prepared. Financial statements are the statements, which present periodic reports on the process of business enterprises and the results achieved during a given period.
Financial statements include Trading and Profit and Loss account, balance sheet and other statements and explanatory notes, which form part thereof. Information provided by financial statements is useful to management to plan and control the business operations. Financial statements are also useful to creditors, shareholders and employees of the enterprise.
Information Provided by Financial Statements
Trading and Profit and Loss account present a true and fair view of the financial performance of the business in the form of profit or loss during the year.
Balance sheet presents a true and fair view of the financial position of the business.
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