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प्रश्न
State the objectives of financial statements from the view point of a business concern.
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उत्तर
The following points highlight the objectives of financial statements from business point of view.
1) To Provide Information about Economic Resources- Financial statements provide adequate, accurate, reliable and periodical information about the employment of economic resources. It also specifies the obligation of a business to its external users who do not have the powers or authority to access the information directly.
2) To Ascertain the Financial Position- These statements help to reveal the true financial position of an enterprise. In other words, it discloses the performance and position of an organisation in terms of their profitability, solvency, liquidity, financial viability, etc.
3) To Ascertain the Earning Capacity- These statements are prepared with an objective of providing useful information to compare, predict and evaluate the earning capacity of a business firm. Thus, it helps in ascertaining the earning capacity of firms.
4) Helps in Decision Making- These statements help the management to frame policies and decision-making process on various accounting matters.
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संबंधित प्रश्न
Give one word/term/phrase for the following statement.
An asset which can be converted into cash immediately.
What do you mean by Analysis of Financial Statement?
State any one limitation of Analysis of Financial Statement.
JW Ltd. was a company manufacturing geysers. As a part of its long-term goal for an expansion, the company decided to identify the opportunity in rural areas. The initial plan was rolled out for Bhiwani village in Haryana. Since the village did not have a regular supply of electricity, the company decided to manufacture solar geysers. The core team consisting of the Regional Manager, Accountant and the Marketing Manager was taken from the Head Office and the remaining employees were selected from the village and neighbourhood areas. At the time of preparation of financial statements, the accountant of the company fell sick and the company debuted a junior accountant temporarily from the village for two months. The Balance Sheet prepared by the junior accountant showed the following items against the Major Heads and Sub-heads mentioned which were not as per Schedule III of the Companies Act, 2013.
| Items | Major Head/Sub-Head |
| Loose Tools | Trade Receivables |
| Cheques in Hand | Current Investments |
| Term Loan from Bank | Other Long-term Liabilities |
| Computer Software | Tangible Fixed Assets |
Identify any two values that the company wants to communicate to the society. Also, present the above items under the correct major heads and sub-heads as per Schedule III of the Companies Act, 2013.
State and explain any 'four objectives' of financial statement analysis from the business point of view.
State the significance of Analysis of Financial Statements to the ‘Lenders’.
State true or false with reason.
Gross Profit depends upon Net Sales.
Give one word/term/ phrase for the following statement
Critical evaluation of financial statement to measure profitability.
Answer the following in brief :
What do you mean by analysis of financial statements?
Answer the following in brief :
State any three limitations of Analysis of financial statement.
What is ‘analysis’ of financial statement?
Explain the limitations of analysis of financial statements.
The Common Size Statement requires _________.
Give one word/term/phrase for the following statement.
The statement showing financial position for different periods of previous year and current year.
Give one word/term/phrase for the following statement.
Statement showing changes in cash and cash equivalent during a particular period.
Give one word/term/phrase for the following statement.
Activity related to acquisition of long term assets and investment.
State true or false with reason.
Financial Statement includes only Balance Sheet.
State true or false with reason.
Dividend paid is not a source of fund
State true or false with reason.
The short term deposits are considered as cash equivalent.
State true or false with reason.
Ratio analysis measures profitability efficiency and financial soundness of the business.
Answer in one sentence only.
State the formula of Cost of goods sold?
Which of the following statements is not true?
Which of the following are not tools of Financial Analysis?
- Cash Flow Statement
- Income Statement
- Balance Sheet
- Ratio Analysis
It is technique which involves regrouping of data by application of arithmetical relationships. Identify the technique and state any two advantages of the technique identified.
