Everything you need to know about the limitations of financial accounting. Financial Accounting is the father of accounting system. Cost Accounting is a branch of accounting and has been developed due to the limitations of financial accounting. Financial Accounting gives general information about the major functions of the business such as finance, administration, production and distribution. Financial accounting aims at [...]
Funds flow statement is a method by which we study changes in financial position of a business enterprise between two accounting periods. It is prepared with the help of two balance sheets of an enterprise. Broadly speaking, preparation of funds flow statement involves two stages, namely – 1. Statement or schedule of changes in working capital 2. Statement of sources [...]
This classification is based on the purpose for which an analyst computes these ratios. For easy understanding and to achieve the purpose of ratios effectively, ratios may be classified as:- 1. Profitability Ratios 2. Coverage Ratios 3. Turnover Ratios/Activity Ratio 4. Financial Ratios/Liquidity Ratio 5. Leverage Ratios/Long-Term Solvency Ratios. These are discussed one by one below: 1. Profitability Ratios: The [...]