Features of Financial Statements
1. Recorded Facts
It is the feature of financial statements that it is based on recorded facts. We record daily transactions relating to cash, bank, purchase, sale and many others. All these transactions are recorded on the historical cost or revenue. So, financial statement shows only book value of assets, liabilities, incomes and expenditures.
2. Accounting Conventions
For making financial statements, we use some of accounting conventions. These conventions are useful for making financial statements more comparable, easy and real.
3. Accounting assumptions
For making financial statements, we accept going concern and measurement in money assumption.
4. Personal Judgment
Personal judgment is very important in making of financial statement. For example, if we use FIFO for valuation of inventory, our financial statements show result according to this judgment and it will different if we use LIFO for valuation of inventory. There are many other valuation methods and one of these; we have to apply in accounting. Except these, there are many other decisions affect financial statements.
Types of Financial Statement
1. Balance Sheet
2. Profit and Loss Account
3. Profit and Loss Appropriation Account
3. Fund Flow Statement
4. Cash Flow Statement