Why analysis of financial statement is based of past records?
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Answer:
because as per our accounting standards, we have to follow the historical cost concept in which items are recorded with lower cost..
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Analysis of financial statement is very important in finding the cost of different requirements
Explanation:
- in a company the analysis of financial statement is very necessary for finding the different expenditure and amount of profit that is gained per unit spent of expenditure.
- As a result of this the cost effectiveness of a process can be studied. In addition to this the effectiveness of the labour can also be found out. for example if a labour who has been hired for a large amount of money does less productive work then to such labour can increase the productivity with a considerable lower amount of money
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