Value

added statement questions and answers pdf

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service. Studypool 4.7 Trustpilot 4.5 Sitejabber 4.4 Stuck on a homework question? Our verified tutors can answer all questions, from basic math to advanced rocket science! A financial statement shows how much
wealth a reporting entity has been able to create for its shareholders within an accounting period through utilization of its capital, employees and other resources. Whereas, the value added technique is considered to be an effective tool for measuring the performance of a company as it displays an additional financial information which can
supplement the need of various stakeholders. Therefore, you may say that a value added statement reports value created by an enterprise for different stakeholders including shareholders through the collective effort of capital, management manpower and other resources. The concept of Value Added (VA) is originated in U.S. and the Value Added
Statement (VAS) has come to be seen with greater frequency in Europe and more particularly in Britain.
In 1975, the Accounting Standard Steering Committee (ASSC) published the Corporate Report containing the suggestions for British companies to present VAS in addition to the traditional profit and loss account. papamunoka.pdf In India, Britannia Industries Limited (An Indian food-products Corporation based in Kolkata) and some others prepare
VAS as supplementary financial statement in their annual reports. Value Added Statement is now being considered as a broad measure of judging the corporate performance than conventional measures based on traditional accounting system of an enterprise. VAS is regarded as an important part of Corporate Social Reporting (CSR) which provide
additional information to satisfy all stakeholders of the enterprise. The Value Added Statement is nothing but a financial statement which displays how much value has been created by an enterprise during a particular period and application of that created value to the following five stakeholders including shareholders: To Pay: Employees; Directors;
Government; Providers of Capital; and To Provide for maintenance and Expansion of the company. The profit and loss account basically concentrate on net profit which is calculated on entity concept and more attributable towards shareholders. Whereas the VAS is wider in nature and created on enterprise concept or enterprise theory with an
objective that all ascertaining profits attributable to five more stakeholders in addition to shareholders. Accordingly, the VAS puts profit in a different perspective and focuses on the success of a company in creating wealth and generating national income. If you look closer and compare profit and loss account with the value added statement then you
will find that VAS is just reproduced statement of P/L account in a different way to show how much value (wealth) has been allocated to stakeholders. But, you should remind one thing that VAS can never substitute the Profit and Loss account which is a part of Financial Statement in accordance with sub-clause (ii) of clause (40) of section 2 of the
Companies Act, 2013. Consequently, VA statement may be shown as supplementary statement of financial information and is not a mandatorily requirement for companies. street view api android The term value added may be simply defined as a positive difference between the value of goods or services produced (i.e. the value of output) and the
value of services purchased (i.e. the value of inputs) from other firms in producing output. In equation form it can be stated as follows: Value Added (VA) = Value of Output (VO) – Value of Inputs (VI) The Value Added may be classified into two categories: Gross value added (GVA) and Net value added (NVA). a) Gross Value Added (GVA): The GVA
refers to sales plus income from other services less bought-in-materials and services purchased from outside suppliers; and b) Net Value Added (NVA): The NVA refers to the difference between GVA and Depreciation. In other words, NVA is the sum of the value added to employees, to providers of loan capital, to Government and to owners. The
majority of British companies as well as Indian companies prefer to present their value added statement as a report on Gross Value Added (GVA) rather than Net Value Added (NVA).

There are two most important reasons for reporting GVA rather than NVA by companies: i) Gross Value Added or Total Value Added reports depreciation along with retained profits. GVA shows that depreciation is also available for reinvestment in addition to the retained earnings and reserves for the maintenance and expansion of the company.
Whereas, in case of NVA, depreciation is treated as expenses and therefore denotes that it is not available for re-investment purpose by the enterprise. ii) The gross measures of national income is also liked by the Economists rather than the net reporting. Accordingly, the GVA statement is congruent with the economist’s views and preferences for
gross measures of national income. In other words, reporting GVA indicates the company’s contribution to national income. The Value Added Statement (VAS) can be prepared either in Vertical Form like a Report or Horizontal Form like an Account. However, many companies prefer to report GVA/NVA in Vertical form rather horizontal form. Further,
the apex body of Accountancy Profession in India, the Institute of Chartered Accountants of India (ICAI) has also illustrated and recommends to prepare the VAS as report. If you are student of CA Institute you may refer the study material, Revision Test Papers (RTPs) and Practice Manual for the same. The conventional VAS is divided into two parts
viz. the first part shows the calculation of Gross and/or Net value added and the second part displays the application of such value added to different stakeholders. kumogo.pdf AUBSP Pvt. Ltd.VALUE ADDED STATEMENTfor the year ended March 31, 2018