Page 270 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting Pretty Bhalla, Lovely Professional University

Notes Unit 12: Corporate Financial Statements

CONTENTS
Objectives
Introduction
12.1 Nature of Corporate Financial Statements
12.1.1 Objective of Corporate Financial Statements

12.2 Types of Corporate Financial Statements
12.2.1 Income Statement
12.2.2 Balance Sheet
12.2.3 Statement of Cash Flow
12.2.4 Statement of Retained Earnings
12.3 Uses of Corporate Financial Statements
12.4 Limitation of Corporate Financial Statements

12.5 Summary
12.6 Keywords
12.7 Review Questions
12.8 Further Readings

Objectives

After studying this unit, you will be able to:
 Understand the nature of corporate financial statements
 Have types of corporate financial statements

 Use of corporate financial statements
 Describe the limitation of corporate financial statements

Introduction

Corporate entities registered in India are primarily guided by the provisions of the Companies
Act, 1956. Every company is required to keep proper books of accounts showing all money
received and spent and the details thereof; sale and purchase of goods; income earned and
expenses accrued and assets and liabilities. As per the provisions of the Companies Act, 1956
proper books of accounts shall not be deemed to be kept if such books are insufficient to give a
true and fair view of the state of affairs of a company.

Did u know? What is proper books of account?
Two essential conditions are to be satisfied for a set of books of accounts to be called
proper books of account:
(a) Double entry accounting is followed while recording transactions.
(b) The books of accounts are maintained on accrual basis.

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