Financial Statements General Features of Financial Statements

- Structured financial representation of (FFGACMOC)

the financial position and financial - Fair presentation and compliance
performance of an entity with PFRS
- Components: - Frequency of Reporting
- Statement of Financial - Going Concern
Position (balance sheet) - Accrual Basis
- Income Statement - Consistency of presentation
- Statement of Comprehensive - Materiality and Aggregation
Income - Offsetting
- Statement of Changes in - Comparative information
Equity
- Statement of Cash Flows Statement of Financial Position
- Notes in the Financial - Formal statement showing the
Statement assets, liabilities, and equity of the
- Objective is to provide information entity.
about the financial position, financial - Primary users use the statement of
performance, and the cash flows of financial position to evaluate such
an entity that is useful to a wide factors as liquidity (ability of the
range of users in making economic entity to meet currently maturing
decisions. obligations) and solvency
- Financial position comprises all the (availability of cash over the longer
assets, liabilities, and equity of an term to meet maturing obligations).
entity.
- Financial performance comprises Assets
the revenue and expenses and net - Present economic resource
income or loss of an entity. controlled by the entity as a
- Cash Flows are the cash receipts result of past events
from operating, financing, and - Essential characteristics
investing activities. (CPE):
- Controlled by the
Financial Reporting entity
- Much broader than Financial - Result of past event
Statements - Produce economic
- Includes financial statements, benefits
financial highlights, summary of - Presentation of Current
important financial figures and Assets (CFTIP):
analysis of financial statements. - Cash and Cash
- The objective of financial reporting is Equivalents
to provide financial information - Financial assets at
useful to the primary users in making fair value of profit or
decisions about providing resources loss
to the entity. - Trade and other
Receivables
 - Inventories - A contingent liability when
- Prepaid Expenses possible and measurable is
- Presentation of Non - Current disclosed.
Assets (PLIO): - A contingent liability when
- Property, Plant, and probable and not measurable
Equipment is disclosed.
- Long term - If probable and measurable,
Investments recognized as loss and an
- Intangible Assets estimated liability as a
- Other noncurrent provision.
assets
- Deferred Tax is a
Probable Likely (51% and
NCA above)
- Contingent assets are only
disclosed when probable. Possible Less likely (50% or
Liabilities less)
- Essential Characteristics
Remote Least likely (10% or
(PEP): less)
- Present obligation
- Transfer an economic
resource Working Capital = Current Assets -
- Arises from past Current Liabilities
events
- Presentation of Current Equity
Liabilities (TCSCC): - Residual interest in the
- Trade and other assets of the entity after
payables deducting all of the liabilities.
- Current provisions
- Short-term borrowing Share Capital and Share Premium
- Current portion of - Share capital is the portion of
long term debt the paid in capital
- Current tax liability representing the total par
- Presentation of Non - Current value of the shares issued
Liabilities (NLDLL): - Subscribed share capital is
- Noncurrent portion of not yet fully paid therefore,
long term debt unissued.
- Lease liability - Share premium is the capital
- Deferred tax liability contributed by shareholders
- Long term obligations in excess of the par value.
to entity officers - Cannot issue stocks that are
- Long term deferred not yet fully paid
revenue
Retained Earnings Statement of Comprehensive Income
- Unappropriated retained - Starts with the net income or
earnings represent the loss and plus or minus the
portion which is free and can components of other
be declared as dividends. comprehensive income
Distributable Equity (Debit - OCI includes the following:
Balance) - Unrealized gain or
- Appropriated retained loss on equity
earnings are restricted and investment measured
therefore cannot be available at FVoCI
for dividend declaration. Non - Unrealized gain or
Distributable Equity(Credit loss on debt
Balance) investment measured
at FVOCI
Treasury Shares - Gain or loss from
- Entity’s own shares that have translating the
been issued and then financial statements
reacquired but not canceled of a foreign operation
- Recorded at cost and not - Revaluation surplus
recognized as an asset during the year
- Normal balance is debit - Unrealized gain or
loss from derivative
Forms of Statement of Financial Position contracts designated
- Report Form as cash flow hedge
- Account Form - Remeasurements of
defined benefit plan
Notes to Financial Statements (SSSO) - Change in fair value
- Statement of compliance with PFRS attributable to credit
- Summary of significant accounting risk of a financial
policies used liability designated at
- Supporting information or FVPL
computation for line items presented
in the financial statements
Additional Notes:
- Other disclosures ● Financial statements are the
means which the information
Statement of Comprehensive Income accumulated is communicated to
Forms of Income Statement: the users
- Functional ● Other terms for operating cycle
- Natural are cash-to-cash cycle, net
operating cycle, and conversion
- There is no prescribed format cycle
for the income statement ● If operating cycle is less than one
year, follow the one year cycle
● Examples of Dividends are cash,
stock, and property dividends.
● Share dividends are not an asset
nor a liability.
● Small share dividends are less
than 20%
● Large share dividends are 20% or
more.
● Conservatism is observed in
accounting.
● Income summary is closed
through capital or retained
earnings.