Final Accounts of Companies — Flashcards
ICSE · Class 12 · Accountancy
40 flashcards for Final Accounts of Companies (ICSE Class 12 Accountancy) to test yourself on key terms and facts.
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What are final accounts or financial statements?
Answer
Final accounts, or financial statements, are the final product of the accounting process for an accounting period. They show the financial position and the results of business activities for that peri…
Which two statements generally make up the final accounts of a company?
Answer
The two main statements are the Profit and Loss Account, also called the Income Statement or Statement of Profit and Loss, and the Balance Sheet.
What does the Balance Sheet show?
Answer
The Balance Sheet shows the total of assets, liabilities, and capital of an enterprise at a given date. It is also called the Position Statement or Statement of Financial Position.
Why is the Profit and Loss Account important in final accounts?
Answer
The Profit and Loss Account shows the profit or loss from business operations for a specified accounting period. It helps find the result of business activities before the financial position is shown …
What are the three general principles for maintaining books of accounts in a company?
Answer
A company must keep books according to the double entry system, on accrual basis of accounting, and in a way that gives a true and fair view of the financial position of the company.
What does Section 2(40) of the Companies Act, 2013 include in the meaning of financial statement?
Answer
Financial statement includes the Balance Sheet, Profit and Loss Account or Income and Expenditure Account for a not-for-profit company, Cash Flow Statement, Statement of Changes in Equity if applicabl…
What is the meaning of financial year for a company under the Companies Act, 2013?
Answer
Financial year ends on 31st March every year. If a company is incorporated on or after 1st January, then the financial year ends on 31st March of the following year. The accounting year is 1st April t…
What does Section 129 of the Companies Act, 2013 require a company to do at the end of every financial year?
Answer
Every company must prepare final accounts at the end of every financial year and present them by the Board of Directors before the shareholders for approval at the annual general meeting. The auditor'…
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