Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Financial Statements of a Company NCERT Solutions | State the importance of financial statem
State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
(i)Shareholders- They are interested in assessing the profitability and viability of the capital invested by them in the business. The financial statements prepared by the business concerns enable them to have sufficient information to assess the financial performance and financial health of the business.
(ii) Creditors- Creditors are interested in the financial statements of businesses to learn about the status of their going concern, profitability, financing, liquidity, and cash flow. An entity is a going concern if it is likely to remain in business for the foreseeable future without going into bankruptcy.
(iii) Government- As a business owner, your financial statements offer valuable
information about your companys overall financial position, such as areas of
financial strength or weakness. Financial statements are important to tax authorities to ensure the accuracy of taxes and additional duties declared and
paid by your company.
(iv) investors- Financial statements are important to investors because they can
provide enormous information about a companys revenue, expenses,
profitability, debt load, and the ability to meet its short-term and long-term
financial obligations.
More Questions From Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Chapter Financial Statements of a Company
- Q:-
How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress - Q:-
Prepare the format of balance sheet and explain the various elements of balance sheet.
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Prepare the format of statement of profit and loss and explain its items.
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Explain the process of preparing income statement and balance sheet.
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Explain how financial statements are useful to the various parties who are interested in the affairs of an undertaking?
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List any three objectives of analysing financial statements?
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State the meaning of financial statement analysis?
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Explain the limitations of financial statements.
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Explain the nature of the financial statements.
- Q:-
‘Financial statements reflect a combination of recorded facts, accounting
conventions and personal judgements’ discuss.
Popular Questions of Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
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List the techniques of Financial Statement Analysis.
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State the meaning of ‘Debentures issued as a collateral security’.
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What relationships will be established to study?
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(c) Payables Turnover (d) Working Capital Turnover - Q:-
State the meaning of Analysis and Interpretation.
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What is meant by ‘Issue of debentures for consideration other than cash’?
Recently Viewed Questions of Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
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State the meaning of ‘Debentures issued as a collateral security’.
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Can the company purchase its own debentures?
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What relationships will be established to study?
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Differentiate between redemption of debentures out of capital and out of profits.
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Explain how common size statements are prepared giving an example.
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State the importance of Financial Analysis?
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Name the head under which ‘discount on issue of debentures’ appears in the balance sheet of a company.
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