Features of Financial Statements

Financial statements are those which reveal the financial position of the company at a particular point of time. Financial statements include balance sheet, profit and loss account and cash flow statements. Given below are some of the features or characteristics of financial statements –

  1. Financial statements are those statements which present historical data, which implies that financial statements reveal what has already happened and they do not tell anything about the future.
  2. Financial statements are expressed in monetary terms, so profit and loss statements show the profitability of the business, balance sheet reveal the financial position of the company and cash flow statement reveal the cash position or liquidity which is there with the company.
  3. Financial statements do not reveal the employee satisfaction levels, or effort put by the owner of the company and all other such qualitative factors are excluded from financial statements.
  4. Financial statements should reveal all things and should not leave out any thing which materially affects the decision of the person who is reading that financial statements and then taking decision regarding the company. For example prospective shareholders will look financial statements before investing into the company.
  5. Financial statements of the company should be prepared in such a way that they are comparable with the other companies in the same industry or they are comparable with past financial statements of the same company.
1 comment… add one
  • Prasenjit Talukdar

    The answer are in easiesit language…Thanks

Leave a Comment


Related pages


meaning of demand in hindiforfeiting financeunsystematic risk examplesadvantages of factoringassumption of capmwhat are characteristics of a traditional economyfifo method inventorymarketing skimming definitionimportance of horizontal analysiswhat are inferior goods examplesdemerits of advertisingquota tariffslr & crrpenetration pricing examplesnationalization advantages and disadvantagesthe advantages and disadvantages of capitalismwhat is job specialization what are its advantages and disadvantageswhat does the word consignment meandisadvantages of mergersdisadvantages of international joint ventureswhat are current liabilities examplesdenomination intermediationdisadvantages of bank reconciliation statementadvantages of loan syndicationsalary payable journal entrydirect indirect quotationeconomic value added advantages and disadvantagesmonopolistic competition market structuresbills receivable journal entryskimmed pricingdecentralization disadvantagessocial media marketing advantages and disadvantagesdifference between order cheque and bearer chequehorizontal analysis in accountingfull form of capexadvantages of a swot analysiswhat are the advantages of urbanizationadvantages and disadvantages of issuing stockbills receivable journal entrydescribe the characteristics of a traditional economyadvantages and disadvantages of globalisation wikipediaadvantages and disadvantages of a joint venturedifference between inferior and normal goodsthe main features of a capitalistic economic system areaccumulated depreciation exampleexchange rate quotationshire purchase advantages and disadvantagesearned value management disadvantagesretail banking vs wholesale bankingadvantages of process costingadvantages of payback methodexample of price skimming strategydefinition cost push inflationvertical analysis of financial statementdurable and nondurable goods examplesdistinguish between assets and liabilitiessubstitution effect and income effect examplesimportance of capital budgeting pdfskimming pricing strategymeaning of penetration pricingthe disadvantages of democracycomplements in economics examplescontingent liabilities on balance sheetinternational trade advantages and disadvantagesunbilled deferred revenueaccounting concept of materialityadvantages of dcfbackward integration examplesadvantages of decentralizationdisadvantages of functional organizational structurebills of discountingadvantages and disadvantages of commodity exchangeexample of demand depositpurpose of preparing trial balancecapitalistic economymonopoly oligopolydisadvantages of vertical integrationwhat is the materiality conceptexamples of horizontal integration companiesbill discounting meaningbarter system in economics