Abidfakirblog

Introduction   The most important function of an accounting system is to provide information about the profitability of the business. A sole trader furnishes a Trading and Profit and loss Account which depicts the result of   the business transactions of the sole trader. Along with the Trading and Profit and Loss Account he also   prepares a Balance Sheet which shows the financial position of the business. Therefore, reading financial statements is important for investor to know the conditions of company. Investor need to watch these financial statements 1. Balance sheet  2. Profit and Loss Account. 3. Cash flow statements A new investor who come from non-accounting background, face difficult to understand financial statements.So, we are going to break some terms into simple terms. 1. Balance Sheet:  Business needs some resources which have longer life (say more than a year). Such resources are, therefore, not related to any particular accounting period, but ar...