The end part of the accounting process is called the financial statement. This end part is complex and makes students working on accounts go for accounting help or just need a digital marketing help.
The financial statement provides information about the financial position of the business and its profitability. Section 129 (1) of the Companies Act 2013 states that the financial statement of a company:
- gives a fair view of the company’s state of affairs,
- should follow the accounting standards which are notified under Section133 and
Objectives of Preparing Financial Statement:-
- It gives a fair view of the financial position, profit or loss, of the business.
- It shows the true nature of performance, that is, assets and liabilities, of the business.
Characteristics of Financial Statements:-
- Financial statements are considered to be historical documents as they are related to the past period.
- They are written in the form of money.
- Financial statements reflect the financial position through the Balance Sheet. They also the company’s profitability through Statement of Profit and Loss.
Nature of Financial Statements:-
- Recorded facts:
Recorded facts refer to the data used to prepare financial statements drawn from accounting records. For example, cost of fix assets, cash at bank, trade receivables, figures relating to cash in hand, etc., are record facts.
The financial statement does not include the facts which are not record in the books if at all they are significant or not. The assets purchase either at different prices or at different times are reflected in the Balance Sheet at their real cost.
They are not reflect in the Balance Sheet at their replacement cost due to the accounting records, which states that the cost price of the set cost is a record fact.
Accounting Conventions show certain fundamental accounting principles that must be keep in mind while preparing financial statements and gaining wide acceptance.
For example, because of ‘Conservatism,’ the expect profits are ignore, and the provision is make in the books for the expected future losses. Similarly, the closing inventory is value at the realizable value or at the cost, whichever is less.
This signifies that the actual financial position can be much better than the position disclosed by financial statements.
in accounting, personal judgment plays a decisive role. For example, the accountant’s decision whether the asset is to be depreciate on a written down value method, straight-line method, or some other method. He also decides the rate of depreciation through his judgments.
Similarly, the inventory is value at realizable value or cost as in Standard Cost, Average Cost, First in First Out, Last in First Out, etc. The accountant has the choice to go with any of these methods.
Likewise, it is the responsibility of the accountant to give his judgment for the classification of ExpenditureExpenditure and capital and revenue, the period for writing off intangible assets,
and the rate of provision for doubtful debts. These things somehow will guide you regarding homework help usa .
Some general instructions are to be follow for the preparation of the Financial Statement, also know as the Balance Sheet:
- An asset shall be classified as current when it persuades any of the following criteria:
- it is intend for consumption or sale in, or is expect to be realiz in, the normal operating cycle of the company,
- to be trade, it is hold predominantly,
- After the reporting date, it is anticipate to be realize within twelve months.
Else, the remaining assets shall be classified as non-current.
- The operating cycle refers to the time between acquiring assets to be process and their realization either in cash equivalents or cash.
- It is assume to have a duration of twelve months when the company’s normal operating cycle cannot be identify.
- Liability shall be classified as current only when it fulfills any of the
- it must be settle in the company’s normal operating cycle,
- it is hold predominant to be trade,
- After the reporting date, it is due to be settle within twelve months.
Rest all are consider as non-current liabilities.
- Trade receivables are receivables that can be call so if they respect the amount due based on the goods and services sell in the normal course of business. They may include Bills Receivables and Sundry Debtors.
- Payables that are in respect of the amount based on account of services rendered or goods
- sold in the normal course of business are call trade payables.
- No debit balance of profit and loss and assets:
The elimination of the Profit and Loss statement from the assets is an important change in Schedule 3. Now, it is present as the negative balance under the
subheading ‘Reserve and Surplus.’
- Miscellaneous ExpenditureExpenditure such as Discount on Issue of Shares/Debentures, Preliminary Expenses, Loss on Issue of Debentures,
- Underwriting Commission should be write off from the sub-heading Securities
- Premium Reserves (if at all it exists)
or from Surplus, that is, balance in Statement of Profit and Loss within ‘Reserve and Surplus’ or General Reserve, in the year in which they occur.
- The elimination of ‘Schedules’ as per Schedule 3 helps such information be
- furnished in ‘Notes to Accounts.
These were a few basic points that students studying accounts must remember and can refer to while accounting for help or Assignment Help USA .