Features of financial statements

Features of financial statements

Following are the features of financial statements:

i.            Financial statements are generally prepared at the end of an accounting period based on transactions recorded in the books of accounts.

ii.            These statements are prepared for the organisation as a whole.

iii.            Information is presented in a meaningful way by grouping items of similar nature such as fixed assets and current assets.

iv.            Financial statements are prepared based on historical cost.

v.            Financial statements are prepared based on accounting principles and Accounting Standards, which make financial statements comparable and realistic.

vi.            Financial statements involve personal judgement in certain cases. For example, selection of method of depreciation, percentage of reserve, etc.