PPT: Financial Statements - I | Accountancy Class 11 - Commerce PDF Download

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Financial Statements - I
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Financial Statements - I
Stakeholders & Information Needs
Internal Stakeholders
Owners, managers 3 need detailed 
performance data for planning, 
control, and quick decision-making.
Employees 3 seek job security, pay 
raises based on company success.
External Stakeholders
Banks, govt., investors 3 assess 
creditworthiness, taxes, profitability 
trends.
Suppliers 3 monitor financial health 
for timely payments, long-term 
contracts.
Outcome
Financial statements supply 
consistent, reliable info to meet 
a l l users' varying demands.
Helps predict future cash flows 
and overall business viability.
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Financial Statements - I
Stakeholders & Information Needs
Internal Stakeholders
Owners, managers 3 need detailed 
performance data for planning, 
control, and quick decision-making.
Employees 3 seek job security, pay 
raises based on company success.
External Stakeholders
Banks, govt., investors 3 assess 
creditworthiness, taxes, profitability 
trends.
Suppliers 3 monitor financial health 
for timely payments, long-term 
contracts.
Outcome
Financial statements supply 
consistent, reliable info to meet 
a l l users' varying demands.
Helps predict future cash flows 
and overall business viability.
Capital vs. Revenue
Capital Expenditure
Multi-period benefit 
(machinery/buildings); 
recorded on Balance Sheet.
Revenue Expenditure
Spent within one period 
(rent, wages); recorded in 
P/L Account.
Reasoning
Correct classification prevents misstated profits.
Deferred revenue outlays (like heavy advertising) may spread 
over multiple periods.
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Financial Statements - I
Stakeholders & Information Needs
Internal Stakeholders
Owners, managers 3 need detailed 
performance data for planning, 
control, and quick decision-making.
Employees 3 seek job security, pay 
raises based on company success.
External Stakeholders
Banks, govt., investors 3 assess 
creditworthiness, taxes, profitability 
trends.
Suppliers 3 monitor financial health 
for timely payments, long-term 
contracts.
Outcome
Financial statements supply 
consistent, reliable info to meet 
a l l users' varying demands.
Helps predict future cash flows 
and overall business viability.
Capital vs. Revenue
Capital Expenditure
Multi-period benefit 
(machinery/buildings); 
recorded on Balance Sheet.
Revenue Expenditure
Spent within one period 
(rent, wages); recorded in 
P/L Account.
Reasoning
Correct classification prevents misstated profits.
Deferred revenue outlays (like heavy advertising) may spread 
over multiple periods.
Financial Statements
Purpose
Summarize all transactions 
to show true profitability 
and financial position.
Provide clear data for 
stakeholders to make 
informed decisions.
Key Reports
Trading & P/L: Shows 
overall profit/loss from 
operations.
1.
Balance Sheet: Reflects 
assets, liabilities, 
capital at period-end.
2.
Additionally
Prepared post3Trial Balance to confirm accounts match.
Serve as the primary communication tool with 
stakeholders.
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Financial Statements - I
Stakeholders & Information Needs
Internal Stakeholders
Owners, managers 3 need detailed 
performance data for planning, 
control, and quick decision-making.
Employees 3 seek job security, pay 
raises based on company success.
External Stakeholders
Banks, govt., investors 3 assess 
creditworthiness, taxes, profitability 
trends.
Suppliers 3 monitor financial health 
for timely payments, long-term 
contracts.
Outcome
Financial statements supply 
consistent, reliable info to meet 
a l l users' varying demands.
Helps predict future cash flows 
and overall business viability.
Capital vs. Revenue
Capital Expenditure
Multi-period benefit 
(machinery/buildings); 
recorded on Balance Sheet.
Revenue Expenditure
Spent within one period 
(rent, wages); recorded in 
P/L Account.
Reasoning
Correct classification prevents misstated profits.
Deferred revenue outlays (like heavy advertising) may spread 
over multiple periods.
Financial Statements
Purpose
Summarize all transactions 
to show true profitability 
and financial position.
Provide clear data for 
stakeholders to make 
informed decisions.
Key Reports
Trading & P/L: Shows 
overall profit/loss from 
operations.
1.
Balance Sheet: Reflects 
assets, liabilities, 
capital at period-end.
2.
Additionally
Prepared post3Trial Balance to confirm accounts match.
Serve as the primary communication tool with 
stakeholders.
Trading & Profit and Loss Account
Trading Section
Focus: Direct costs vs. sales, yielding Gross Profit = 
Sales 3 (Purchases + Direct Expenses).
Shows core operational margin before overheads.
Profit & Loss Section
Incorporates overheads, indirect costs, extra income ³ 
Net Profit = Gross Profit + Other Incomes 3 Indirect 
Expenses.
Net figure transferred to capital account.