INSTITUTE-UNIVERSITY SCHOOL OF

BUSINESS
DEPARTMENT-MBA
Master of Business Administration
Financial Reporting and Analysis
BAT-601

UNDERSTANDING
FINANCIAL STATEMENT DISCOVER . LEARN . EMPOWER
 UNDERSTANDING
FINANCIAL
STATEMENT
Course Outcome
CO Title Level
Number

CO1 To impart understanding of the Basic Principles of Remember Will be covered in this
Accounting, Accounting Standards, Reading and Analyzing   lecture
Balance sheets and its application in modern day business
CO2 To prepare various financial statements i.e. trading Understand
account, Profit and loss account and balance sheet, P/L  
Appropriation account, cash flow statement etc.
CO3 To provide knowledge of concepts those are helpful in Understand
financial decision making

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 Financial Statement
• They are the basic and formal annual reports through
which the corporate management communicates
financial information to its owners and various
other external parties which include investors, tax
authorities, government, employees, etc.

• These normally refer to: (a) the balance sheet

(position statement) as at the end of accounting
period, and (b) the statement of profit and loss of a
company.

• Now-a-days, the cash flow statement is also taken

as an integral component of the financial statements
of a company.
 Nature of Financial Statement

1. Recorded Facts

2. Accounting Conventions

3. Postulates

4. Personal Judgments
 Objectives of Financial Statement
• To provide information about economic resources and obligations of a business

• To provide information about the earning capacity of the business

• To provide information about cash flows

• To judge effectiveness of management

• Information about activities of business affecting the society

• Disclosing accounting policies

 Uses of Financial Statement
• Report on stewardship function

• Basis for fiscal policies

• Basis for granting of credit

• Basis for prospective investors

• Guide to the value of the investment already made

• Aids trade associations in helping their members

• Helps stock exchanges

 Form and Content of Balance Sheet
Balance sheet of a company is presented in the form prescribed in (Revised) Schedule VI of the Companies Act, 1956.
 Form and Content of Income Statement
Statement of Profit and Loss represents revenue, expenses and financial result of a business entity.
 Users of Financial Statement
• Informational requirement of a number of stakeholders in the business
• Internal Stakeholder
• Owners
• Management
• Employees
• External Stakeholders
• Government/ Tax department
• Investors
• Banks/Lenders
• Suppliers/Creditors
• NGOs/ Industry associations
• Researchers
• Accounting is the tool for providing financial information to various stakeholders
Assessment Pattern

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 References

•Reference book- Maheshwari S.N, Accounting for Management, Vikas Publishing House, New Delhi,2010
•Reference Website: https://www.accountingtools.com/articles/users-of-financial-statements.html
•Reference Journal for advance study: Journal of Accountancy (JOA)

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THANK YOU

For queries
Email: reepu.usb@cumail.in