Kerala Plus One Accountancy Notes Chapter 8 Financial Statements – I & II
Summary:
Financial Statements:
Meaning and types Financial statements are the statements which present periodic reports on the process of business enterprises and the results achieved during a given period. Financial statement includes trading, profit & loss account, balance sheet and other statements.
Trading and Profit & Loss Account:
Trading and Profit & Loss account is prepared to ascertain the net result of business operations during a given period.
Format of Trading and Profit & Loss Account (In horizontal form):
Trading and Profit & Loss Account for the year ended ………………
Need for Adjustment:
For the preparation of financial statements, it is necessary that all adjustments arising out of the accural basis of accounting are made at the end of the accounting period. Entries which are given outside the trial balance are called adjustment entries.
Treatment of various types of adjustments:
Balance Sheet:
The balance sheet is a statement of assets and liabilities of business enterprises and shows the financial position at a given date. It is not an account. It is only a statement.
Assets and liabilities shown in the balance sheet are marshaled in order to liquidity or in order to permanence.
Format of Balance Sheet (In horizontal form)
Balance sheet as on …………….
The Performa of the income statement and balance sheet in vertical form.
Income Statement for the period ended ……..
Balance sheet as on………..
