FINANCIAL STATEMENTS
General purpose of Financial
Statements
Statements intended to meet the needs of
users who are NOT IN A POSITION to require
an entity to prepare reports tailored to their
particular information needs.
a.
b.
c.
d.
e.
f.
g.
Components of Financial Statements
Statement of Financial Position
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes, comprising a summary of
significant accounting policies and
other explanatory explanation
Objective of Financial Statements
The objective of general purpose of financial
statements is to provide information about
the financial position, financial performance
and cash flows of an entity thar is useful to a
wide range of users in making economic
decisions.
Information needs to meet the
objective of financial statements
a.
b.
c.
d.
ASSETS
LIABILITIES
EQUITY
INCOME AND EXPENSES, GAIN AND
LOSSES
e. CONTRIBUTION BY AND AND
DISTRIBUTION TO OWNERS
f. CASH FLOWS
Statement of Financial Position –
pertains to the liquidity, solvency, and
financial flexibility or the need of additional
financing
Assets
Liabilities
Equity
Statement of Financial Performance – is
the level of income earned by the entity
through the efficient and effective use of its
resources
Revenue
Expenses
Net Income or Loss
Statement of Cash Flows – cash receipts
and cash payments arising from the
operating, investing and financing activities of
the entity
FINANCIAL REPORTING
Financial Reporting – provision of financial
information about an entity to external users
that is useful to them in making economic
decisions and for assessing the effectiveness
of the entity’s management. It includes
financial information and nonfinancial
information.
Objective of Financial Reporting
Provide financial information about the
reporting entity that is useful to existing and
potential investors, lenders and other
creditors in making decisions about providing
resources to the entity.
General purpose financial reporting is
directed primarily to the existing and
potential investors, lenders and other
creditors which compose the primary user
group.
Specific Objective of Financial Reporting
To provide information useful in making
investing and credit decisions
To provide information useful in assessing the
cash flow prospects of the entity
To provide information about the entity
resources, claims and changes in resources
and claims
Responsibility for Financial Reporting
Management of an entity – primarily
responsible for the preparation and
presentation of financial statements
Board of Directors – discharging its
responsibility reviews and authorizes the
financial statements for issue before these
are submitted to the shareholders of the
entity.
Management – accountable for the
safekeeping of the resources and their proper,
efficient and profitable use.