The Profit and Loss statement, also known as the income statement, details the financial performance of an entity over a specific period, such as a quarter or a year. It calculates net income by subtracting total expenses and costs from total revenues, providing insight into the company's profitability.

Liquidity refers to how quickly an asset can be converted into cash. Cash is the most liquid asset. Stock (inventory) must be sold to become a receivable, then collected as cash. Debtors are closer to cash than inventory. Building is a fixed asset and the least liquid. Thus, the order is Cash, Stock, Debtors, Building.

A Balance Sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It details the company's assets (what it owns), liabilities (what it owes), and equity (capital provided by owners), ensuring the accounting equation remains balanced.

Opening inventory is a component of the Cost of Goods Sold (COGS) calculation. If the opening inventory is undercast, the total COGS is artificially lowered. Since gross profit is calculated as Sales minus COGS, a lower COGS results in a higher gross profit. Consequently, this higher gross profit flows through to the net profit, causing both figures to be overstated in the financial statements for that period.

If gross profit is 25% of sales, then the cost of goods sold (COGS) represents 75% of sales (100% - 25%). Given COGS is Rs. 1,00,000, sales = 1,00,000 / 0.75 = 1,33,333.33. Gross profit is 25% of 1,33,333.33, which equals approximately Rs. 33,333.

Statement (i) is true because the business entity concept treats the business as separate from its owners. Statement (ii) is true as equity represents the claim of owners on assets. Statement (iii) is false because a Balance Sheet represents a financial position at a specific point in time, not over a period of time (which is the function of an Income Statement).

Financial statements, particularly the Balance Sheet, are designed to reflect the financial position of a business at a specific point in time by summarizing its assets, liabilities, and equity, providing a clear view of its solvency.

The annual report is a formal document published by public companies to provide shareholders and the public with detailed information about the company's financial performance, operational results, and future outlook. It includes audited financial statements, management discussion and analysis, and strategic goals, which are essential for investors to perform fundamental analysis and project future earnings potential.

Direct expenses are costs directly attributable to the production or acquisition of goods. Wages, carriage inward, octroi, purchases, and coal expenses are all costs incurred to bring goods to a saleable condition or location. Since both option A and option C contain items that are classified as direct expenses, option D is the correct choice.

In a balance sheet, assets are typically arranged in order of their liquidity, starting from the least liquid (fixed assets) to the most liquid (cash). Furniture and fittings are fixed assets (least liquid), followed by long-term investments, then trade receivables (current assets), and finally cash (most liquid). Therefore, the sequence is furniture, investments, trade receivables, and cash.