1. State the meaning of financial statements?
2. What are limitations of financial statements?
3. List any three objectives of financial statements?
4. State the importance of financial statements to:
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
2. What are limitations of financial statements?
3. List any three objectives of financial statements?
4. State the importance of financial statements to:
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
Answers & Comments
Verified answer
3) #1 – Past Performance and Current Position Assessment. Practical Application.
#2 – Prediction of Net Income and Judging the Growth. ...
#3 – Prediction of the Bankruptcy of a Business Entity and another Failure. ...
#4 – Help Stakeholders and other users to make Economic Decisions.
2) They are Only Interim Reports: Profit and loss account discloses the profit/loss for a specified period. It does not give an idea about the earning capacity over time similarly, the financial position reflected in balance sheet is true at that point of time, the likely change on a future date is not depicted.
1) Financial statements are a collection of summary-level reports about an organization's financial results, financial position, and cash flows. They include the income statement, balance sheet, and statement of cash flows.