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Accounting Ratios — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyAccounting Ratios1 Mark
Question
Interpretation is usually done through ________.
  1. Ratio and flow statements
  2. Ratio statements
  3. Flow statements
  4. None of the above
✓

Answer

  1. Ratio and flow statements
Explanation:

Accounting cycle consists of various steps such as recording,summarising,analysing and interpretation. After carrying out all the steps of recording and summmarising interpretation of financial statements takes place.

It is carried out so that managers can make important decisions regarding company welfare. Ratio and flow statements makes it effective to carry out interpretation easily. Hence, interpretation is usually done through ratio and flow statements.

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