What traumatic event does Zitkala-Sa describe at the school?

The forcible cutting of her long hair

Why was the cutting of her hair so humiliating to Zitkala-Sa?

Among her people, shingled hair was worn by cowards and mourners

What are financial statements?

They are the formal annual reports—balance sheet, statement of profit and loss and cash flow statement—through which management communicates financial information to owners and external parties.

What do financial statements combine?

They combine recorded facts, accounting conventions, postulates such as going concern and money measurement, and personal judgements.

Which schedule prescribes the format of company financial statements?

Schedule III of the Companies Act 2013 prescribes the form and content of the balance sheet and statement of profit and loss.

Name the main heads of equity and liabilities in a company balance sheet.

Shareholders' funds, share application money pending allotment, non-current liabilities and current liabilities.

What are the main heads of assets in a company balance sheet?

Non-current assets and current assets.

Name the major expenses shown in the statement of profit and loss.

Cost of materials consumed, purchases of stock-in-trade, changes in inventories, employee benefit expenses, finance costs, depreciation and other expenses.

How is proposed dividend treated under Schedule III?

It is shown in the Notes to Accounts as a contingent liability until declared by the shareholders.

State two objectives of financial statements.

To provide information about the economic resources and obligations of the business and about its earning capacity and cash flows.

State two limitations of financial statements.

They are based on historical cost and do not reflect the current situation, and they provide only aggregate, monetary information ignoring qualitative factors.

Financial Statements of a Company

Q: What is included under shareholders' funds?

Share capital, reserves and surplus, and money received against share warrants.

Class 12 Accountancy · Accountancy Part II · Chapter 3

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Summary

Financial statements are the basic and formal annual reports through which a company's management communicates financial information to its owners and to external parties such as investors, lenders, tax authorities and the government. They are the end products of the accounting process and include the balance sheet (position statement), the statement of profit and loss and the cash flow statement. Their nature combines recorded facts, accounting conventions, postulates such as the going-concern and money-measurement assumptions, and personal judgements about matters like depreciation and provisions. Every company registered under the Companies Act 2013 must prepare its balance sheet and statement of profit and loss in the format prescribed by Schedule III. The balance sheet is presented in a vertical form, classifying items into shareholders' funds, non-current and current liabilities, and non-current and current assets, with detailed disclosures given in the Notes to Accounts. The statement of profit and loss shows revenue from operations, other income, and expenses such as cost of materials consumed, employee benefits, finance costs and depreciation, leading to profit before and after tax and earnings per share. Financial statements help users assess profitability and financial position, but they are limited because they rely on historical cost, contain only aggregate and monetary information, involve personal bias, and are only interim reports.

Nature and objectives of financial statementsBalance sheet format under Schedule IIIStatement of profit and lossNotes to Accounts and disclosuresUses and limitations of financial statements

Key terms

Financial Statements

The formal annual reports—balance sheet, statement of profit and loss and cash flow statement—through which a company communicates its financial information.

Balance Sheet

A position statement showing the assets, liabilities and shareholders' funds of a company as on a particular date.

Statement of Profit and Loss

A performance statement showing revenue, expenses and the resulting profit or loss for an accounting period.

Schedule III

The schedule to the Companies Act 2013 that prescribes the format and content of the balance sheet and statement of profit and loss.

Notes to Accounts

Detailed disclosures supporting the items shown on the face of the financial statements.

Shareholders' Funds

The owners' claim in the company, comprising share capital, reserves and surplus, and money received against share warrants.

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Financial statements are best described as:

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Financial Statements of a Company

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Practice quiz · Financial Statements of a Company

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