Discuss the term financial statement taking into account its scope,objective and components.

Expert Solution

Financial Stament are the formal written records of an organisation.

Scope: The Financial Statements record the financial transactions of an organization.

Objective: The purpose of preparation of Financial Statement is to provide financial information to the stakeholders of the Organisation in a systematic way.

Components : Following are the components of Financial Statement:-

1. Balance Sheet: It records the monetory rights and obligation in form of assets and libilities respectively

2. Income Statement : It reciords the Income and Expenses and then calculates net gain or loss.

3.Statement of Cash flows : It records the cash outgoings and incomings and hence shows the total net outflow or inflow along with the heads.

4.Statement of changes in equity: It shows shows the changes in the elements of equity from previous year.

5.Notes to finacial statements: These notes provide the explanation and additional information about the operations of the organisation.

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ekkarill92 answered 2 years ago

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