CHAPTER 1
FINANCIAL STATEMENTS
Definition
Financial statements are the means by which the information accumulated and processed
in financial accounting is periodically communicated to the users.
Stated differently, the financial statements are the end product or main output of the
financial accounting process.
Financial statements are a structured financial representation of the financial position and
financial performance of an entity.
General purpose financial statements
PAS 1 prescribes the basis for the preparation of "general purpose" financial statements
to ensure comparability both with the entity's financial statements of previous periods
and with the financial statements of other entities.
General purpose financial statements are those 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.
Reports prepared at the request of an entity's management or bankers are not general
purpose financial statements because they are prepared specifically to meet the needs of
management or bankers.
Components of financial statements
A complete set of financial statements comprises the following components:
1. Statement of financial position
2. Income statement
3. Statement of comprehensive income
4. Statement of changes in equity
5. Statement of cash flows
6. Notes, comprising a summary of significant accounting policies and other
explanatory information
Many entities also present reports and statements such as environmental reports
and.value added statements, particularly in industries in which environmental
factors are significant and when employees are regarded as an important user
group.
, However, such statements and reports are not components of financial statements
and therefore outside of the scope of PFRS.
Objective of financial statements
The objective of general purpose financial statements is to wide range of users in
making economic decisions.
Financial statements also show the results of the management's stewardship of the
resources entrusted to it.
To meet this objective, financial statements provide information about the
following:
a. Assets
b. Liabilities
c. Equity
d. Income and expenses, including gains and losses
e. Contributions by and distributions to owners in their capacity as owners
f. Cash flows
Such information, along with other information in the notes, would assist users of financial
statements in predicting the entity's cash flows and in particular their timing and certainty.
However, financial statements do not provide all the information that users may need to
make economic decisions since they largely portray the financial effects of past events
and do not necessarily provide nonfinancial information.
FINANCIAL STATEMENTS
Definition
Financial statements are the means by which the information accumulated and processed
in financial accounting is periodically communicated to the users.
Stated differently, the financial statements are the end product or main output of the
financial accounting process.
Financial statements are a structured financial representation of the financial position and
financial performance of an entity.
General purpose financial statements
PAS 1 prescribes the basis for the preparation of "general purpose" financial statements
to ensure comparability both with the entity's financial statements of previous periods
and with the financial statements of other entities.
General purpose financial statements are those 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.
Reports prepared at the request of an entity's management or bankers are not general
purpose financial statements because they are prepared specifically to meet the needs of
management or bankers.
Components of financial statements
A complete set of financial statements comprises the following components:
1. Statement of financial position
2. Income statement
3. Statement of comprehensive income
4. Statement of changes in equity
5. Statement of cash flows
6. Notes, comprising a summary of significant accounting policies and other
explanatory information
Many entities also present reports and statements such as environmental reports
and.value added statements, particularly in industries in which environmental
factors are significant and when employees are regarded as an important user
group.
, However, such statements and reports are not components of financial statements
and therefore outside of the scope of PFRS.
Objective of financial statements
The objective of general purpose financial statements is to wide range of users in
making economic decisions.
Financial statements also show the results of the management's stewardship of the
resources entrusted to it.
To meet this objective, financial statements provide information about the
following:
a. Assets
b. Liabilities
c. Equity
d. Income and expenses, including gains and losses
e. Contributions by and distributions to owners in their capacity as owners
f. Cash flows
Such information, along with other information in the notes, would assist users of financial
statements in predicting the entity's cash flows and in particular their timing and certainty.
However, financial statements do not provide all the information that users may need to
make economic decisions since they largely portray the financial effects of past events
and do not necessarily provide nonfinancial information.
