Archive | Financial Statement

Top 5 Elements of Financial Statements | Accounting

This article throws light upon the top five elements of financial statements. They are: 1. Assets 2. Liabilities 3. Equity 4. Income 5. Expense. Element # 1. Assets: Features of an asset: i. The future economic benefit embodied in an asset is the potential to contribute, directly or indirectly, to the flow of cash and […]

Various Components of Reserves and Surplus | Accounting

Various components of reserves and surplus are: (i) Capital reserve which represents unrealised revaluation profit on property, plant and equipment and intangible assets. This also termed as Revaluation Reserve. (ii) Debenture Redemption reserve which represents profit set aside for re­demption of debentures. (iii) Capital redemption reserve which represents utilised reserve for redemp­tion of preference share […]

Why do we Need to Prepare Financial Statements?

Get the answer of: Why do we Need to Prepare Financial Statements? Financial Reporting Standards: Having discussed various stakeholders group of an entity, let us now turn to financial reporting system which facilitates the preparation and presentation of general purpose financial statements. International Financial Reporting Standards (IFRSs) have recently emerged as global financial reporting standards […]

Preparation of Financial Statements

After reading this article you will learn about the preparation of financial statements. Financial Statements: As per IFRSs financial statements comprise of Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and related notes to accounts. Statement of Compre­hensive Income has two sub-components – Statement of Income […]

Funds Flow Statement: Meaning and Preparation

In this article we will discuss about:- 1. Meaning of Funds Flow Statement 2. Preparation of Funds Flow Statement 3. Benefits and Drawbacks. Meaning of Funds Flow Statement: The profit and loss account and balance sheet statements are the common important accounting statements of a business organization. The profit and loss account provides financial information […]

Cash Flow Statement | Financial Management

Cashflow statement provides information about the cash receipts and payments of a firm for a given period. It provides important information that compliments the profit and loss account and balance sheet. The information about the cashflows of a firm is useful in providing users or financial statements with a basis to assess the ability of […]

Funds Flow Statement: Meaning, Rules and Advantages

In this article we will discuss about the Funds Flow Statement:- 1. Meaning of Funds Flow Statement 2. Rules for Drawing up the Funds Flow Statement 3. Advantages 4. Limitations. Meaning of Funds Flow Statement: Accounting Standard (Revised)-3 has made Funds Flow Statement obsolete. Hence, the following description is meant only for those who may, […]

Cash Flow Statement: Definition, Classification and Advantages

In this article we will discuss about the Cash Flow Statement:- 1. Introduction to Cash Flow Statement 2. Definition of Cash Flow Statement 3. Classification of Activities 4. Advantages 5. Limitations. Contents: Introduction to Cash Flow Statement Definition of Cash Flow Statement Classification of Activities in Cash Flow Statement Advantages of Cash Flow Statement Limitations […]

Maintaining Cash Flow Statement

The following points highlight the top two methods for maintaining cash flow statement. The methods are: 1. Direct Method 2. Indirect Method. Cash Flow Statement: Method # 1. Direct Method: Under the direct method, cash receipts from operating revenues and cash payments for operating expenses are calculated and shown in the cash flow statement in […]

Financial Statements of a Business Enterprise

The financial statements are: 1. Profits and Loss Account 2. Balance Sheet 3. Statement of Changes in Financial Position (SCFP). Financial Statement # 1. Profits and Loss Account: Profit and loss account, also known as income Statement, presents the results of operations of a business enterprise for a period of time. This statement shows net […]

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