STATEMENT OF FINANCIAL POSITION ●​ Consignment Inventory (goods held by third parties

(Balance Sheet) for sale)

●​ Direct Materials
CURRENT ASSETS ●​ Direct Labor
Cash and Cash Equivalents ●​ Applied Overhead
●​ Cash on Hand ●​ Custom-Built Products
●​ Cash in Bank (e.g., checking accounts, savings ●​ Batch-Specific Inventory
accounts) Prepaid Expenses
●​ Petty Cash ●​ Prepaid Rent
●​ Short-Term Investments (e.g., Treasury bills, money ●​ Prepaid Insurance
market funds) ●​ Prepaid Advertising
●​ Bank Drafts ●​ Prepaid Taxes
●​ Cash in Foreign Currencies ●​ Prepaid Subscriptions
●​ Cash Restricted for Specific Purposes (e.g., payroll, ●​ Prepaid Maintenance Contracts
taxes)if short term CA, if long term NCA Ex. Cash ●​ Prepaid Software Licenses
reserved for debt covenants or legal settlements due ●​ Prepaid Royalties
beyond 12 months. Short-Term Investments
●​ Undeposited Funds (e.g., checks received but not yet ●​ Marketable Securities (e.g., stocks, bonds)
deposited) ●​ Certificates of Deposit (CDs)
Accounts Receivable ●​ Government Bonds (short-term)
●​ Trade Receivables (amounts owed by customers) Other Current Assets
●​ Allowance for Doubtful Accounts (contra-asset ●​ Advances to Employees
account for bad debts) ●​ Advances to Suppliers
●​ Claims Receivable (e.g., insurance claims, legal ●​ Tax Refunds Receivable
claims) ●​ Deposits (e.g., utility deposits, security deposits)
●​ Notes Receivable (short-term) ●​ Dividends Receivable
●​ Accrued Interest Receivable ●​ Escrow Accounts (e.g., for legal settlements)
●​ Factored Receivables (sold to a third party but with ●​ Advances to Officers or Directors
recourse) ●​ Current Portion of Deferred Tax Assets
●​ Retention Receivables (amounts withheld until
project completion) NON-CURRENT ASSETS
●​ Unbilled Receivables (revenue earned but not yet Property, Plant, and Equipment (PPE)
invoiced) ●​ Land (not depreciated)
Inventory ●​ Buildings
Merchandising Company: ●​ Machinery and Equipment
●​ Finished Goods Inventory ●​ Vehicles
●​ Goods in Transit ●​ Furniture and Fixtures
●​ Damaged Goods Inventory ●​ Leasehold Improvements
●​ Obsolete Inventory ●​ Accumulated Depreciation (contra-asset account)
●​ Seasonal Inventory (e.g., holiday-specific goods) ●​ Construction in Progress (CIP)
●​ Promotional Inventory (items for sales campaigns) ●​ Land Improvements (e.g., parking lots, landscaping)
●​ Perishable Goods ●​ Fully Depreciated Assets (still in use but fully written
●​ High-Value Items (e.g., jewelry, electronics) off)
●​ Consignment Goods (held by third parties) Intangible Assets
Manufacturing Company: ●​ Patents
●​ Raw Materials Inventory ●​ Trademarks
●​ Work-in-Progress (WIP) Inventory ●​ Copyrights
●​ Finished Goods Inventory ●​ Goodwill
●​ Supplies Inventory ●​ Software Development Costs
●​ Spare Parts Inventory ●​ Licenses and Permits
●​ Scrap Inventory (waste materials with residual ●​ Accumulated Amortization (contra-asset account)
value) ●​ Franchise Agreements
●​ Obsolete Inventory Reserve (contra-account for ●​ Broadcasting Rights
obsolete items) ●​ Mining Rights
●​ Customer Lists (purchased in a business
combination)
Long-Term Investments ●​ GST/VAT Payable
●​ Investments in Subsidiaries ●​ Warranty Liabilities
●​ Investments in Associates (equity method) ●​ Customer Refunds Payable
●​ Bonds Held to Maturity ●​ Insurance Premiums Payable
●​ Long-Term Notes Receivable ●​ Sales Tax Payable
●​ Real Estate Investments ●​ Payroll Taxes Payable
●​ Investment in Joint Ventures ●​ Unclaimed Property (e.g., uncashed checks)
●​ Investment in Mutual Funds
●​ Non-Marketable Securities NON-CURRENT LIABILITIES
Deferred Tax Assets Long-Term Debt
●​ Tax Loss Carryforwards ●​ Bonds Payable
●​ Temporary Differences (e.g., deferred revenue) ●​ Long-Term Loans
Other Non-Current Assets ●​ Mortgage Payable
●​ Long-Term Prepaid Expenses ●​ Convertible Bonds
●​ Restricted Cash (e.g., for debt covenants) ●​ Subordinated Debt
●​ Deferred Charges (e.g., bond issuance costs) ●​ Non-Current Portion of Capital Lease Obligations
●​ Non-Current Advances Deferred Tax Liabilities
●​ Long-Term Advances to Suppliers ●​ Depreciation Timing Differences
●​ Deferred Bond Issuance Costs ●​ Revenue Recognition Timing Differences
●​ Non-Current Portion of Deferred Tax Assets Pension Liabilities
●​ Defined Benefit Pension Obligations
CURRENT LIABILITIES ●​ Post-Employment Benefits
Accounts Payable ●​ Defined Contribution Plan Obligations
●​ Trade Payables (amounts owed to suppliers) ●​ Multi-Employer Pension Plans
●​ Accrued Purchases Lease Liabilities
●​ Claims Payable (e.g., legal claims, warranty claims) ●​ Operating Lease Obligations
●​ Notes Payable (short-term) ●​ Finance Lease Obligations
●​ Payables to Related Parties (e.g., subsidiaries, Other Non-Current Liabilities
affiliates) ●​ Long-Term Warranty Liabilities
●​ Retention Payables (amounts withheld from ●​ Deferred Compensation
contractors) ●​ Long-Term Customer Advances
Short-Term Debt ●​ Environmental Liabilities (e.g., cleanup costs)
●​ Bank Overdrafts
●​ Short-Term Loans EQUITY
●​ Current Portion of Long-Term Debt Share Capital
●​ Line of Credit (used portion) ●​ Common Stock (at par value)
●​ Commercial Paper ●​ Preferred Stock (at par value)
●​ Current Portion of Capital Lease Obligations ●​ Additional Paid-In Capital (APIC)
Accrued Expenses ●​ Class A Common Stock
●​ Accrued Wages and Salaries ●​ Class B Common Stock
●​ Accrued Interest ●​ Redeemable Preferred Stock
●​ Accrued Utilities Retained Earnings
●​ Accrued Taxes (e.g., income tax, sales tax) ●​ Opening Retained Earnings
●​ Accrued Bonuses ●​ Net Income (current period)
●​ Accrued Vacation Pay ●​ Dividends Declared
●​ Accrued Commissions ●​ Closing Retained Earnings
●​ Accrued Professional Fees (e.g., legal, audit) ●​ Appropriated Retained Earnings (e.g., for expansion)
Deferred Revenue ●​ Unappropriated Retained Earnings
●​ Customer Deposits Treasury Shares
●​ Unearned Revenue (e.g., advance payments for ●​ Cost of Repurchased Shares (contra-equity account)
services) Other Comprehensive Income (OCI)
●​ Gift Card Liabilities ●​ Unrealized Gains/Losses on Available-for-Sale
●​ Subscription Revenue (e.g., magazines, software Securities
licenses) ●​ Foreign Currency Translation Adjustments
Other Current Liabilities ●​ Revaluation Surplus (for PPE or intangible assets)
●​ Dividends Payable ●​ Cash Flow Hedges (gains/losses)
 ●​ Actuarial Gains/Losses on Pension Plans ●​ Direct Labor: Wages of employees directly involved
Reserves in production.
●​ Legal Reserves ●​ Manufacturing Overhead: Indirect production costs
●​ General Reserves (e.g., factory utilities, depreciation of machinery).
●​ Capital Redemption Reserve ●​ Freight-In Costs: Costs to transport raw materials to
●​ Dividend Equalization Reserve the factory.
●​ Statutory Reserves (required by law) ●​ Freight-Out Costs: Costs to deliver finished goods to
●​ Capital Reserve (from revaluation of assets) customers.
●​ Hedge Reserve (for hedging activities) ●​ Inventory Write-Downs: Reduction in inventory value
due to obsolescence or damage.
SPECIALIZED ITEMS FOR MANUFACTURING COMPANIES
Manufacturing Supplies: GROSS PROFIT
●​ Lubricants Formula: Gross Profit = Net Revenue - COGS
●​ Cleaning Supplies
●​ Safety Equipment OPERATING EXPENSES
Work-in-Progress (WIP): Selling Expenses
●​ Direct Materials ●​ Advertising and Promotion: Costs of marketing
●​ Direct Labor campaigns (e.g., TV ads, social media).
●​ Applied Overhead ●​ Sales Commissions: Commissions paid to sales staff.
Finished Goods: ●​ Delivery and Shipping Costs: Costs to deliver goods
●​ Custom-Built Products to customers.
●​ Batch-Specific Inventory ●​ Sales Salaries: Salaries of sales representatives and
●​ managers.
●​ Trade Show Expenses: Costs of participating in trade
SPECIALIZED ITEMS FOR MERCHANDISING COMPANIES shows.
Merchandise Inventory: ●​ Marketing Materials: Costs of brochures, catalogs,
●​ Perishable Goods and samples.
●​ High-Value Items (e.g., jewelry, electronics) ●​ Customer Service Costs: Salaries of customer service
●​ Consignment Goods (held by third parties) staff.
Purchase Discounts: ●​ Warranty Expenses: Costs of honoring product
●​ Early Payment Discounts warranties.
●​ Volume Discounts Administrative Expenses
●​ Salaries and Wages: Salaries of executives,
accountants, and HR staff.
●​ Rent: Office rent for administrative buildings.
STATEMENT OF FINANCIAL PERFORMANCE ●​ Utilities: Electricity, water, and internet for
(Income Statement) administrative offices.
●​ Office Supplies: Stationery, printer ink, and other
office materials.
REVENUE
●​ Depreciation: Depreciation of office furniture and
●​ Gross Sales: Total sales before returns, allowances,
equipment.
or discounts.
●​ Insurance: Insurance for office premises and
●​ Less: Sales Returns and Allowances: Refunds or
administrative staff.
discounts given to customers.
●​ Professional Fees: Legal, audit, and consulting fees.
●​ Less: Sales Discounts: Early payment discounts
●​ Travel and Entertainment: Business travel and client
offered to customers.
meetings.
●​ Net Sales (Net Revenue): Revenue after deducting
●​ Communication Expenses: Phone, internet, and
returns, allowances, and discounts.
postage costs.
●​ Service Revenue: Income from providing services.
●​ Software Licenses: Costs of accounting software,
●​ Other Operating Revenue: Revenue from secondary
CRM tools, etc.
activities (e.g., rental income, royalties).
●​ Training and Development: Employee training
programs.
COST OF GOODS SOLD (COGS)
●​ Bank Charges: Transaction fees and service charges.
●​ Direct Materials: Cost of raw materials used in
Research and Development (R&D) Expenses
production.
●​ R&D Salaries: Salaries of scientists, engineers, and
researchers.
 ●​ Lab Supplies: Chemicals, materials, and equipment
used in R&D. INCOME TAX EXPENSE
●​ Prototyping Costs: Costs of creating product Formula: Income Tax Expense = Income Before Tax × Tax Rate
prototypes.
●​ Testing and Quality Control: Costs of testing new NET INCOME
products. Formula: Net Income = Income Before Tax - Income Tax
●​ Patent Filing Fees: Costs of filing patents. Expense
●​ R&D Equipment Depreciation: Depreciation of lab
equipment. OTHER COMPREHENSIVE INCOME (OCI)
●​ Outsourced R&D Services: Payments to external R&D ●​ Unrealized Gains/Losses on Available-for-Sale
firms. Securities
●​ Software Development Costs: Costs of developing Gains or losses from changes in the fair value of
software. equity or debt securities classified as
●​ R&D Travel Expenses: Travel costs for R&D staff. "available-for-sale."
●​ R&D Facility Costs: Rent and utilities for R&D ●​ Foreign Currency Translation Adjustments
facilities. Gains or losses from translating the financial
Other Operating Expenses statements of foreign subsidiaries into the reporting
●​ Maintenance and Repairs: Costs of maintaining currency.
machinery, equipment, and facilities. ●​ Revaluation Surplus
●​ Bad Debt Expense: Write-off of uncollectible Increases in the fair value of property, plant, and
accounts receivable. equipment (PPE) or intangible assets under the
●​ Inventory Write-Downs: Reduction in inventory value revaluation model.
due to obsolescence or damage. ●​ Actuarial Gains/Losses on Defined Benefit Pension
●​ Employee Benefits: Health insurance, retirement Plans
plans, etc. Changes in the present value of defined benefit
●​ Licenses and Permits: Business licenses and pension obligations due to adjustments in actuarial
regulatory permits. assumptions (e.g., discount rate, life expectancy).
●​ Donations and Sponsorships: Charitable ●​ Cash Flow Hedges
contributions. Effective portion of gains or losses on hedging
●​ Security Expenses: Security services and surveillance instruments in a cash flow hedge (e.g., hedging
systems. future cash flows from sales or purchases).
●​ Environmental Costs: Waste disposal and pollution ●​ Net Investment Hedges
control. Effective portion of gains or losses on hedging
●​ Legal Settlements: Costs of legal disputes. instruments in a net investment hedge (e.g., hedging
a foreign subsidiary’s net assets).
OPERATING INCOME ●​ Remeasurement Gains/Losses on Defined Benefit
Formula: Operating Income = Gross Profit - Operating Plans
Expenses Changes in the fair value of plan assets and present
value of defined benefit obligations.
NON-OPERATING INCOME AND EXPENSES ●​ Changes in Fair Value of Debt Instruments at Fair
●​ Interest Income: Income from investments or bank Value Through OCI
deposits. Gains or losses from changes in the fair value of debt
●​ Dividend Income: Dividends received from instruments measured at fair value through OCI
investments. (FVOCI).
●​ Gain on Sale of Assets: Profit from selling assets ●​ Share of Other Comprehensive Income of Associates
(e.g., machinery, land). and Joint Ventures
●​ Interest Expense: Interest paid on loans or bonds. The investor’s share of OCI from associates and joint
●​ Loss on Sale of Assets: Loss from selling assets. ventures accounted for using the equity method.
●​ Foreign Exchange Gains/Losses: Gains or losses from ●​ Gains/Losses on Disposal of Foreign Operations
currency fluctuations. Cumulative translation adjustments reclassified to
●​ Impairment Losses: Reduction in the value of assets profit or loss upon disposal of a foreign operation.
(e.g., goodwill). ●​ Changes in Fair Value of Equity Instruments at Fair
●​ Value Through OCI
INCOME BEFORE TAX Gains or losses from changes in the fair value of
Formula: Income Before Tax = Operating Income + equity instruments designated at fair value through
Non-Operating Income - Non-Operating Expenses OCI (FVOCI).
 ●​ Tax Effects on Other Comprehensive Income ●​ Accounting Policies: Summary of significant
Tax impact related to the items above, presented as accounting policies applied (e.g., revenue
a separate line item or allocated to each OCI recognition, inventory valuation, depreciation
component. methods).
●​ Compliance with IFRS: Statement confirming
TOTAL COMPREHENSIVE INCOME compliance with International Financial Reporting
Formula: Total Comprehensive Income = Net Income + Other Standards (IFRS).
Comprehensive Income ●​ Functional and Presentation Currency: Explanation
of the functional currency and presentation currency
used.
2. Revenue Recognition
●​ Revenue from Contracts with Customers:
Disaggregation of revenue by category (e.g., product
sales, service revenue).
●​ Performance Obligations: Description of
performance obligations and when revenue is
recognized.
●​ Contract Balances: Details of contract assets,
contract liabilities, and receivables.
3. Property, Plant, and Equipment (PPE)
●​ Carrying Amounts: Breakdown of PPE by category
(e.g., land, buildings, machinery).
●​ Depreciation Methods: Explanation of depreciation
methods and useful lives.
●​ Revaluations: Details of revalued assets and
revaluation surplus.
●​ Impairment: Disclosure of impairment losses and
reversals.
4. Intangible Assets
●​ Carrying Amounts: Breakdown of intangible assets
(e.g., patents, trademarks, software).
●​ Amortization: Amortization methods and useful
lives.
●​ Impairment: Details of impairment testing and
losses.
5. Leases
●​ Lease Liabilities: Carrying amount of lease liabilities.
●​ Right-of-Use Assets: Carrying amount of right-of-use
assets.
●​ Lease Expenses: Total lease expenses recognized in
the Income Statement.
6. Inventories
●​ Inventory Categories: Breakdown of inventory (e.g.,
raw materials, work-in-progress, finished goods).
●​ Cost Formulas: Explanation of cost formulas used
(e.g., FIFO, weighted average).
●​ Write-Downs: Details of inventory write-downs and
reversals.
7. Financial Instruments
●​ Categories of Financial Assets and Liabilities:
Classification of financial instruments (e.g.,
amortized cost, fair value through OCI, fair value
through profit or loss).
NOTES TO FINANCIAL STATEMENTS ●​ Fair Value Hierarchy: Disclosure of fair value
1. Basis of Preparation measurements (Level 1, Level 2, Level 3).
 ●​ Credit Risk: Explanation of credit risk management 17. Cash Flow Statement Disclosures
and expected credit losses. ●​ Reconciliation of Profit to Cash Flows: Reconciliation
8. Employee Benefits of net profit to net cash flows from operating
●​ Defined Benefit Plans: Details of defined benefit activities.
pension plans (e.g., present value of obligations, fair ●​ Non-Cash Transactions: Details of significant
value of plan assets). non-cash transactions.
●​ Defined Contribution Plans: Contributions to defined 18. Other Disclosures
contribution plans. ●​ Commitments: Details of capital commitments (e.g.,
●​ Other Employee Benefits: Details of other employee future purchases of PPE).
benefits (e.g., bonuses, health insurance). ●​ Subsequent Events: Disclosure of significant events
9. Income Taxes occurring after the reporting period.
●​ Tax Expense: Breakdown of current and deferred tax ●​ Changes in Accounting Policies: Explanation of
expense. changes in accounting policies and their impact.
●​ Deferred Tax Assets and Liabilities: Details of
deferred tax assets and liabilities.
●​ Tax Reconciliation: Reconciliation of tax expense to
accounting profit.
10. Provisions and Contingencies
●​ Provisions: Details of provisions (e.g., warranties,
legal disputes).
●​ Contingent Liabilities: Disclosure of contingent
liabilities and their likelihood.
●​ Contingent Assets: Disclosure of contingent assets.
11. Equity
●​ Share Capital: Details of share capital (e.g., number
of shares, par value).
●​ Reserves: Breakdown of reserves (e.g., revaluation
reserve, foreign currency translation reserve).
●​ Dividends: Details of dividends declared and paid.
12. Related Party Transactions
●​ Transactions with Related Parties: Details of
transactions with related parties (e.g., key
management personnel, subsidiaries).
●​ Balances with Related Parties: Amounts owed to or
by related parties.
13. Segment Reporting
●​ Operating Segments: Disclosure of operating
segments and their performance.
●​ Geographical Information: Revenue and assets by
geographical region.
●​ Major Customers: Revenue from major customers.
14. Events After the Reporting Period
●​ Adjusting Events: Events that provide evidence of
conditions existing at the reporting date (e.g.,
settlement of a lawsuit).
●​ Non-Adjusting Events: Events that arise after the
reporting date (e.g., natural disasters).
15. Risks and Uncertainties
●​ Financial Risks: Disclosure of financial risks (e.g.,
currency risk, interest rate risk).
●​ Operational Risks: Explanation of operational risks
and mitigation strategies.
16. Earnings Per Share (EPS)
●​ Basic EPS: Calculation of basic earnings per share.
●​ Diluted EPS: Calculation of diluted earnings per
share.
CGM:
+ Direct Materials $50,000
- Raw Materials Used $40,000
- Indirect Materials $10,000
+ Direct Labor $30,000
- Wages of Factory Workers $25,000
- Overtime Pay $5,000
+ Manufacturing Overhead $20,000
- Factory Utilities $5,000
- Depreciation of Machinery $5,000
- Factory Rent $5,000
- Indirect Labor $5,000
= Cost of Goods Manufactured (CGM) $100,000

CGAS:
+ Opening Inventory $20,000
- Raw Materials $10,000
- Work-in-Progress (WIP) $5,000
- Finished Goods $5,000
+ Cost of Goods Manufactured (CGM) $100,000
= Cost of Goods Available for Sale (CGAS) $120,000

COGS:
+ Cost of Goods Available for Sale (CGAS) $120,000
- Closing Inventory $15,000
- Raw Materials $5,000
- Work-in-Progress (WIP) $5,000
- Finished Goods $5,000
= Cost of Goods Sold (COGS) $105,000