Question

Financial statements includes which types of statements are required for external reporting and also for internal needs of the management?

Options

• Profit and loss account

• Balance sheet

• Both Profit and loss account and Balance sheet

• None of the above

Answer 1

Both Profit and loss account and Balance sheet

Explanation:

Financial statements typically include two statements known as the balance sheet and profit and loss account, which are necessary for external reporting as well as internal management needs such as planning, decision-making, and control. These two fundamental statements are backed by various schedules and annexures that complement the data in the balance sheet and profit and loss account. Aside from these two basic financial statements, there is a requirement to know about fund transfers and changes in the company's financial status.