Question

Which of the following are the basic objectives of preparing Financial Statements?

• A. To view financial performance.
• B. To view financial Position.
• C. Both (A) & (B).
• D. None of the above.

Answer 1

Answer: (C)

Both (A) & (B).

To know the financial position of the business, financial statements are prepared. Normally the financial statements are prepared at the end of the financial year.

Financial statements includes the following:

Trading, Profit & Loss A/c - To know the profitability of the business.

Balance Sheet- To know the position of assets and liabilities of the firm.

Fund Flow Analysis- To know the movement of fund during the year.