Unit- 1 

introduction 

Exercise :

1. objective type Questions
1. state whether the following statements are true or false: 
 a) Financial statements are the end products of accounting process.(Ture)
answer:
b) Financial statements contain all information about the business, both quantitative and qualitative.(False)
answer:
c) Financial statements are prepared on the basis of certain assumptions and conventions.(True)
answer:
d) Financial statements provide aggregate information about the business.(True)
answer:   
e) Financial statements are interim reports. (True)
answer:
f) Financial statements are prepared as the responsibility of the management.(Fales)
answer:
g) Preparation of published Account are the responsibility of the management.(True) 
answer:
 h) Financial statements of a company include balance sheet and the statement of profit and loos only.(False)
Answer:
i) Co0ntingent liabilities and those liabilities which will arise in future. (False)
Answer:
2. Fill in the blanks with appropriate word/ words : 
a)  Financial statements include _______, ______ and ________, (Income statement, Balance sheet, case flow statements). 
b) Financial statements are basic______   of information to the interested parties.
(Sources) 

c) Preparation of an income statement is based on______ basis. (Accrual)

d) Equity means______. (Shareholders' Fund)

e) A Balance Sheet is also known as _________ statement.  Ans : position)

f) Financial statements provide a_______ . of the accounts of a business enterprise. (Summary)



g) In case of a company, published accounts are called_______ statements of the management. (Accountability)

h) Published accounts are the statements in the form of _______ prepared by the management. 

(Reports) 
i)_________ assets are those assets the existence of which depends upon the happening of a certain event in future.   (Contingent)

j) Uncalled share capital is a_______ asset.  (Contingent)



3.Choose the correct alternative: a) Balance Sheet shows:

(i) Performance of the business.     (ii) Financial position of an enterprise.

(iii) Both of them.  Ans : (ii)

b) Profit and Loss Account shows:
(i) Liquidity position .  (ii) Result of operation . 
(iii) Both of them. Ans: (ii)

c) Financial statements are prepared by following certain conventions and standards to make the statement :

(i) Comparable (ii) Uniform
(iii) Both of them.  Ans: (iii) 

d)Preliminary Expenses are shown: 
(i) As Miscelleneous Expenditure  (ii) As a deduction from Liabilities.   
(iii) As a deduction from securities premiums reserve account. Ans: (iii)

(iii) As a deduction from Securities Premiums Reserve Account. e) Financial statements are prepared under section :
(i) 211 (1)    (ii) 211 (2)

(iii) 212  Ans: (ii)

f) Balance Sheet reflects 
(i) Assets and liabilities  (ii) Assets, liabilities and capital
(iii) Assets, liabilities, capital, income and expenses. Ans: (ii)

g) Financial statements maybe :
(i) General purpose statements  (ii) Special purpose statements
(iii) any one of them Ans: (iii)
                                                                                                                                                                                                                                                                                                                                                                                             
II. Very short answer type question 
1.What is a financial statement ?
  Ans: 
2. What are the constituents of Financial statements ?
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3. What are the elements of Financial statements ?
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 4. Mention two limitations of financial statements?
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5.Name the elements of a Balance Sheet ?
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6.Name the elements of the Statement of Profit and Loss.
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7. Name two characteristics of fixed assets?
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 8.. Mention two characteristics of current assets
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9. What is a fixed asset?
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10. Name two features of income.
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11. Name the types of Non-current assets.
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12. Name the types of current assets.
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 13. Mention the classes of Non-current liabilities.
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14. Name the classes of current liabilities.
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III. Short Answer type Questions :

1. Give the broad classification of Assets.
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2. Mention the features of Assets. 3. Mention the features of Liabilities.
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4. State the objectives of preparing a Balance Sheet.
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5. State the objectives of preparing an Income statement.
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6. Give the constituents of financial statements.
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 7. State the features of Income.
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IV. Long Answer type Questions :

1. Mention the features of a Balance Sheet. 2. State the objectives of preparing financial statements.
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3. Give the limitations of financial statements.
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4. State the elements of financial statements.
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5.What is meant by accounting information? What are the qualitative features of an accounting information
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6)What are financial statements ? Mention the special features of Balance Sheet and Profit and Loss Account.
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7.What are the elements of financial statements ? Explain the characteristics of each of them.
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8."Financial statements portray the financial effects and other events by grouping them into broad classes according to their economic characteristics". Discuss the nature of financial effects of transactions portrayed in financial statements. What are the broad classes of these transactions?
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Type-Pinku Moni Bora 


Post ID : DABP003297