Professional Documents
Culture Documents
Statements
Definition of Financial
Statements
O Financial statements are the means
Components of Financial
Statements
O Statements of financial position
O Income Statement
O Statement of comprehensive income
O Statement of changes in equity
O Statement of cash flows
O Notes, comprising a summary of
Objective of Financial
Reporting
O The objective of financial reporting is to provide
Equity
d) Income and Expense including gains and losses
e) Contributions by and distributions to owners in
their capacity as owners
f) Cash Flows
c)
Frequency of Reporting
O Shall be presented at least annually.
O If the entitys end of reporting period
period
c) The fact that amounts presented in the
financial statements are not entirely
comparable
Statement of Financial
Position
O Statement of Financial Position
a) Assets
b) Liabilities
c) Equity
Statement of Financial
Position
O Liquidity - is the ability of the
Statement of Financial
Position Assets
O Assets are defined as resources controlled
or event
c) The asset provides future economic benefits.
d) The cost of the asset can be measured
reliably.
Statement of Financial
Position Current Assets
An entity shall classify an asset as current when:
Statement of Financial
Position Current Assets
O Cash and Cash Equivalents -
Statement of Financial
Position Current Assets
O Held for Trading
O Acquired principally for the purpose of selling it
Statement of Financial
Position Current Assets
O Expected to be realized
receivables
O Collectible within one year from
the end of reporting period, the
length of the operating cycle
notwithstanding.
Statement of Financial
Position Current Assets
O Operating Cycle
O The time between the acquisition
Statement of Financial
Position Presentation of Current Assets
O Presented in Order of Liquidity
a)
b)
c)
d)
e)
Statement of Financial
Position N0ncurrent Assets
O Noncurrent assets is a residual definition.
O An entity shall classify all other assets not
current.
Statement of Financial
Position N0ncurrent Assets
O Property, plant and equipment
Statement of Financial
Position N0ncurrent Assets
O Intangible assets - an
Statement of Financial
Position Liabilities
O Liabilities are defined as present obligations of
particular entity.
O The liability arises from past transaction or event.
O The settlement of the liability requires an outflow
of resources embodying economic benefits.
Statement of Financial
Position Current Liabilities
O A liability is current when:
a) The entity expects to settle the liability
following:
a) Trade and other payables
b) Current provisions
c) Short-term borrowing
d) Current portion of long-term debt
e) Current tax liability
Statement of Financial
Position Noncurrent Liabilities
O Noncurrent Liabilities - Residual
definition
O Examples are:
O Noncurrent portion of long-term
debt
O Finance lease liability
O Deferred tax liability
O Long-term obligations to company
officers
O Long-term deferred revenue
Statement of Financial
Position Equity
O The term equity is the
Forms of Statement of
Financial Position
O Report Form
O Three major sections in a
downward form
O Account Form
O Assets are shown on the left
O Liabilities and equity are on the
right
Comprehensive Income
O Comprehensive income is the change
Comprehensive Income
O Profit or Loss
O Is the total of income less expenses
Comprehensive Income
Components of Other Comprehensive Income
1. Unrealized gain or loss on investment in
2.
3.
4.
5.
Comprehensive Income
Income Statement
O An income statement is a formal
products
Comprehensive Income
Income Statement
O Components of expense
O Cost of Sales
O Distribution costs or selling
expenses
O Administrative expenses
O Other expenses
O Income tax expense
Comprehensive Income
Presentation
comprehensive income:
1. Two Statements
An income statement showing the
components of profit or loss
2. A statement of comprehensive
income beginning with profit or loss
as shown in the income statement
plus or minus the components of
other comprehensive income.
1.
2. Single Statement
Comprehensive Income
Presentation and Disclosure
O An entity shall not present any items of
Comprehensive Income
Forms of Income Statement
O Functional Presentation
O This form classifies expenses
Statement of Retained
Earnings
O The statement of Retained Earnings
Statement of Changes in
Equity
O Is a basic statement that shows the
End of Discussion