Accountancy Part BFinancial Statements of a Company

The financial statements of a business enterprise does not include:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Statement of inventory

Financial statements are the formal reports through which a company tells its owners and outsiders about its financial performance and position.

Option (2) Statement of Profit & Loss — A financial statement. It shows the revenue earned and expenses incurred for a period, and the profit or loss.
Option (3) Balance Sheet — A financial statement. It shows the assets, liabilities and equity on a given date.
Option (4) Cash Flow Statement — A financial statement. It shows the movement of cash and cash equivalents during the period.

A statement of inventory is an internal record of the goods in stock. Inventory appears as a line in the balance sheet, but a separate inventory statement is not one of the financial statements.

NCERT (2026-27 edition):
Types of Financial Statements – “The financial statements generally include two statements: balance sheet and statement of profit and loss which are required for external reporting and also for internal needs of the management like planning, decision-making and control. Apart from these, there is also a need to know about movements of funds and changes in the financial position of the company. For this purpose, a cash flow statement is prepard.”