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Question
State whether following statement are true or false :
Financial statements include only balance sheet.
Options
True
False
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Solution
False
Explanation: Financial statements are the statements that report the operating results and the financial position of the business at the end of the accounting period. It consists of two statements, namely, Balance Sheet (i.e. Position statement) and Income Statement (i.e. Trading and Profit and Loss Account). Balance sheet reflects the financial position of the business, whereas, Trading and Profit and Loss Account reflects the operating results, i.e. gross and net profit of the business.
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Prepare Comparative Balance Sheet for the year ended 31.3.18 and 31.3.19 Assets & Liabilities as follows:
| Particulars | 31.3.18 (₹) | 31.3.19 (₹) |
| 1) Fixed Assets | 120,000 | 1,50,000 |
| 2) Share Capital | 60,000 | 72,000 |
| 3) Current Assets | 28,000 | 27,000 |
| 4) Reserve & Surplus | 24,000 | 30,000 |
| 5) Loan | 34,000 | 51,000 |
| 6) Current liabilities | 30,000 | 24,000 |
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Convert the following Trading and Profit and Loss Account into Vertical Income Statement:
| Dr. | Trading, Profit and Loss Account (for the year ended 31st March, 2020) |
Cr. | |
| Particulars | Amount (₹) |
Particulars | Amount (₹) |
| To Opening stock | 50,000 | By Sales | 6,00,000 |
| To Purchases | 4,50,000 | By Closing Stock | 1,50,000 |
| To Carriage | 20,000 | ||
| To Direct expenses | 30,000 | ||
| To Wages | 50,000 | ||
| To Gross Profit c/d | 1,50,000 | ||
| Total | 7,50,000 | 7,50,000 | |
| To Office expenses | 62,500 | By Gross Profit b/d | 1,50,000 |
| To Finance expenses | 15,000 | ||
| To Selling expenses | 50,000 | ||
| To Net Profit c/d | 22,500 | ||
| Total | 1,50,000 | 1,50,000 | |
