POINTS TO REMEMBER
- What is an income statement? Distinguish between its managerial format and the marginal-analysis format.
- Income statement presents the income and expenditure of a firm during a particular financial period.
- Managerial format shows net income at different stages - after deducting the cost of raw material, operating expenses, interest and taxes.
- Marginal-analysis format shows similarly the net income at different stages but divides the cost of goods and the operating cost as variable and fixed expenses.
- What is a balance sheet? What are its limitations?
- Balance sheet shows a firm’s assets and liabilities on a particular date, normally the last day of the financial year.
- It does not show the movement of funds during the fiscal ...
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