Presentation of Published Financial Statements Flashcards
What are the contents of financial statements?
- Statement of profit/loss + other comprehensive income(SPL)
- Statement of financial position (SOFB)
- Statement of cash flow (SOCE)
- Statement of changes in equity(SCF)
- Notes - summary of significant policies and other info
What is the information do financial statements aim to provide
Show
- Financial position
- Financial performance
- Cash flow of entity
- Stewardship of resources
What are the requirements of financial statements?
- Faithful representation as in the conceptual framework
- Use applicable international financial reporting standards (IFRS)
- Accounting policy choices selected should be per IAS 8
- Presented in a relevant, reliable, comparable and understandable way
What is meant by going concern basis
- Assumes entity will continue to trade for the foreseeable future- at least 12 months
- No intention to liquidate the entity or cease trading
What should happen if management is aware of material uncharacteristic which can affect going concern?
- Disclose of those uncertainties in statements
- Still can use going concern basis
What basis is used if an entity is not going to be continuing operations?
- Break up basis
- disclose the basis
- give the reason why the entity is not going concern
What is the accrual basis of accounting
- An entity shall prepare its financial statements by recognising assets, liabilities, equity income and expenses when they meet the criteria for those elements
- rather than when cash is transferred( accruals basis is not applicable to statement of cash flows)
What is the structure of the statement of financial position?
- Assets
- Equity
- Liabilities
What is under the assets section of SOFP
Non-current assets: PPE, Goodwill, Other intangible assets
Current assets: Inventories, Trade receivables, other current assets, Cash and cash equivalents
Total assets
What i included in the equity section of the SOFP
Share Capital
Share premium
Retained Earnings
Revaluation Surplus
Total Equity
What is included in the liabilities section in the SOFP
Non-current Liabilities: Long-term borrowings
Total non- current liabilities
Current Liabilities: Trade and other payables, Short term borrowings, Current tax payables
Total current liabilities
Total Liabilities
Total equity and liabilities
What details are included at the top of financial statements
- Name of entity
- Title of financial statement
- At what date
How can statment of profit/loss and other comprehensive income be presented?
In two ways:
1. In a single statement including both
2. In two statements - separating P/L and OCI
What is the structure of the Statement of P/L and other comprehensive income?
- Revenue (cost of sales, gross profit, distribution costs, admin expense)
- Finance Costs
profit before tax - Income tax expense
- Profit for year
- Other comprehensive income (gains/losses on property revaluation)
- Other comprehensive income for the year
- total comprehensive income for the year
What is included in the cost of sales
- opening inventory
+ Purchases - less closing inventory
What details are required at the top of the Statement of P/L Other comprehensive income?
Name of entity
Title of statement
FOR which period
What is gross profit
Revenue - Cost of sales
What are the two ways expenses can be categorized on financial statements?
By function
By Nature
awareness -How is SPL & other comprehensive income categorised by nature laid out
- Revenue
- changes in inventories of finished goods & works in progress
- raw materials and consumables used
- employees benefits expense
- depreciation and amortisation expense
- impairment of PPE
- total expense - Finance Costs
- profit before tax - Income tax expense
- Profit for the year
other comprehensive income:
gains/losses on property reveal - Other comprehensive income
- Total comprehensive income
What does the statement of changes in equity show
- Reconciles equity section from SOFP from last year to this year
- Can be a primary financial statement or as a note
What is the structure of the statement of changes in equity?
Columns: share capital, share premium, reval surplus, retained earnings, total
Rows
1. Balance at the previous period
2. changes in equity:
Issues of share capital, Dividends, Total comprehensive income for the period, transfer to retained earnings
3. Balance this period
What is the purpose of notes after financial statements
- Provide more detail
Examples: - Profit for period - after crediting Depreciation, Impairement, profit on disposal of PPE, amortisation, research expenditure
How do you work out expenses
Columns: Cost of sales, Distribution costs, Admin costs
Costs + Purchases
+ (Opening Inventory - Closing Inventory)
- Less depreciation charge
How to work out Gross profit
Revenue - Cost of sales
