Financial position of the business is ascertained on the basis of 
  • a)
    Records prepared under book-keeping process. 
  • b)
    Trial balance. 
  • c)
    Accounting reports. 
  • d)
    None of the above.
Correct answer is option 'C'. Can you explain this answer?

CA Foundation Question

Nalini Iyer
Jun 06, 2018
Accounting reports are compilations of financial information that are derived from the accounting records of a business. These can be brief, custom-made reports that are intended for specific purposes, such as a detailed analysis of sales by region, or the profitability of a specific product line. More commonly, accounting reports are considered to be equivalent to the financial statements. These statements include the following reports:

1. Income statement. States the revenues earned during a period, less expenses, to arrive at a profit or loss. This is the most commonly used accounting report, since it is used to judge the performance of a business.

2. Balance sheet. Shows the ending asset, liability, and equity balances as of the balance sheet date.  It is used to judge the liquidity and financial reserves of a business.

3. Statement of cash flows. Shows the sources and uses of cash related to operations, financing, and investments. Can be the most accurate source of information regarding the cash-generating ability of an entity.
A number of disclosures may accompany the financial statements, in the form of footnotes. This is more likely to be the case when the financial statements have been audited.

Mohammad Saad
4 weeks ago
AS ACCOUNTING REPORT CONTAIN
income statement ! balance sheet ! ratio analysis ! cash flow statement ! and comparative / common size statements.

(1) !! INCOME STATEMENT !!
ie. trading and p&l account

which show profit or loss of current year

(2). !! BALANCE SHEET !!
it shows FINANCIAL POSETION

ie. information about assets and liabilities
on that day.
or we can say liquidity and solvency posetion

LIQUIDITY - HOW MUCH AMOUNT OF CASH AVAILABLE
TO PAY YOU DEBTs .
SOLVENCY - HOW DEBT CAPACITY / YOUR CAPACITY TO
TO TAKE LOAN


(3). !! COMPARATIVE AND COMMON SIZE STATEMENTs !!
these are the statements which used to analyse
balance sheet and income statement



(4). !! RATIO ANALYSIS !!
IT IS THE TOLL OF ANALYSIS
WHICH SHOW LIQUIDITY,. SOLVENCY , PROFITABLE ETC

(5). !! CASH FLOW STATEMENT !!
it show how much amount of cash
come inside the business from different sources
and how much amount of cash
go outside the business from different sources


(it is not similar to CASH A/C
CASH FLOW IS A STATEMENT NOT AN ACCOUNT )

AND CASH FLOW STATEMENT consider only
3 sources of finance ( investment , operating, financing)

but CASH A/C show all receipts and payments

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