Class 11 DK Goel Solutions Chapter 21 - Financial Statements
Chapter 21 Financial Statements is important in the Accountancy Syllabus Class 11. As businesses operate and grow, business transactions take place. These are financial transactions that are the inputs for any business and the reason why any business exists in the first place. These need to be recorded as and when these occur.
We have already read in detail about how these transactions find their way into Journal Entries and then how these become a part of larger financial records through the ledger. These important financial records are what we are going to study with the help of DK Goel Solutions Class 11 Accountancy Chapter 21 Financial Statements.
Financial Statements are the formal records of all business transactions made regularly to form a repository of financial information. These records help the management understand and communicate financial information to its various stakeholders viz: owners and various other external parties.
FAQs on DK Goel Solutions Class 11 Accountancy Chapter 21
1. What are the features of a Financial Statement?
The features are as follows:
The Financial Statements must be appropriate for the purpose for which they are being created. Unnecessary and perplexing disclosures should be avoided, and all relevant and material disclosures should be made public.
They should provide complete and accurate information on a company's performance, position, progress, and prospects. It's also crucial that people who create and present the financial figures don't let their personal biases cloud the truth.
They should be easy to compare to earlier statements or statements from similar companies or industries. Financial Statements become more useful when they can be compared.
They should be produced in a classified format to allow for a more thorough and meaningful analysis.
Financial Statements must be created and provided in a timely manner. The relevance and utility of these declarations would be diminished if they were prepared with undue delay.
The Financial Statements must be widely accepted and comprehended. Only by following specific "generally recognised accounting standards" in their preparation can this be accomplished.
2. What is the significance of the Financial Statement chapter?
Part I of Financial Statements is separated into two chapters, and we have supplied revision notes for part I in this discussion. This chapter is as significant and as large as the students have studied and comprehended it to be. Students appear to be having difficulty with this chapter since they are unsure where to record which items.
Financial Statements is also a crucial chapter for students in class 12 and beyond who are studying this topic. These Financial Statements are the year-end Financial Statements that all firms prepare at the end of each fiscal year. Students will lose marks if they post incorrectly.
3. What is expenditure?
Expenditure refers to any payment made for a reason other than to settle existing liabilities. Payment expenditures are classified as follows based on the type of the payment:
- Capital expenditures or non-recurring expenditures are those extended over more than one accounting year For example if you spend money to buy machinery, the advantages of that machinery would most likely last longer than one accounting year, hence this is a capital expenditure. Capital expenditures are reported on the Balance Sheet's assets side.
- Revenue Expenditures are regular expenses incurred for the smooth operation of a business, the benefits of which are limited to a single accounting year. For example, personnel salaries, advertising costs, and so on. These are displayed on the Trading and Profit and Loss Account's debit side.
4. What is the need to create a balance sheet?
The need to create a Balance Sheet is listed below.
It aids in determining the nature and book value of various assets after an accounting period, such as fixed assets, investments, current assets, and so on.
It aids in determining the nature and quantity of various liabilities owed by a business, such as long-term liabilities, current liabilities, provisions, and so on.
It provides crucial information regarding a company's capital investment. Additional capital spent throughout the accounting period, owner's withdrawals, and profit (or loss) added to (or subtracted from) the business's capital.
It aids in determining a company's solvency.
It reveals a company's genuine financial status at a certain period in time.
It establishes the foundation for keeping fresh books for the next accounting period.
5. Will Vedantu provide all solutions?
Vedantu is an online platform that has the solution to all the questions CBSE and ICSE academics include. Students can find sample papers for practice on the website of Vedantu. Along with this, additional study materials are also available on the website which can be downloaded free of cost. Vedantu also hosts live sessions with experts from all over the country on its platform where students can clarify their doubts.
Vedantu aims to provide global online exposure to the students for their overall development.