Question

Why analysis of financial statement is based of past records?

Answer 1

Answer:

because as per our accounting standards, we have to follow the historical cost concept in which items are recorded with lower cost..

Answer 2

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