The

Financial Statements
 Financial Statements
• Financial statements are the structured presentation of an entity’s
financial position and results of its operations.
• It is the end product of the accounting cycle.
• The financial statements provide information on:
• How much resources are controlled by an entity and how these
resources were generated (financial position)
• How well the entity performed during a certain period (results of
operation)
 Users of Financial Statements
INTERNAL EXTERNAL
A.Those individuals 1. Owners 1. Creditors A. Those outside a
inside a company 2. Managers 2. Investors company who want
who plan, financial information
3. Employees 3. Government
organize, and run about the company.
the business. 4. Consumers
5. Customers B. These users are
B. These users are 6. Research not directly involved
directly involved Scholars in managing and
in managing and 7. Regulatory operating the
operating the business.
Authorities
business.
 Complete set of Financial Statements(FS)
Statement of
Financial Position
(SFP)
Other name:
Balance Sheet
It shows the current position
of the company in terms of
the resources it owns, the
obligations claimed against it
and the owner’s residual
interest
Statement of Comprehensive Statement of Statement of Cash
Income Changes in Equity Flow
(SCI)
Other names: Other name:
Income Statements, Statement of Income and Cash Flow Statement
Expense
It shows the company’s performance Tells the story about the Tells a specific story
for the period of time, including owner’s stake in the about the cash
Revenues, Expenditures and the company, It shows the transactions.
Beginning Capital,
company’s NET Profit/Loss for the The Inflows and
Withdrawal of resources or
period. outflows of cash from
additional investment and Operating, Financing
the Owner’s capital for the and Investing Activities
period
 Financial Statement and their contents
Title Contents Date
Statement of Financial Assets, Liabilities and Equity (as at or as of)
Position

Statement of Comprehensive Revenues and Expenses (For the Period Ended)

Income

Statement of Changes in Transaction involving Owner’s (For the Period Ended)

Equity Equity: Net Profit/Loss,
Investment and Withdrawals

Statement of Cash Flows Transaction involving Cash (For the Period Ended)
 Useful Financial Information (IASB 2010)
Fundamental Qualitative Enhancing Qualitative
Characteristics Characteristics
“makes information useful” “enhances useful information”

Relevance Comparability
Faithful Representation Verifiability
Timeliness
Understandability
 The Pro-forma of general-purposed
Financial Statements
A. The Income Statement reports all the income and expenses during the period. The
profit or loss is the final figure in this statement.

b. The Statement of Changes in Equity consider the profit and loss figure from the
income statement as one of the determining factors that explains the change in owner’s
equity.

c. The statement of Financial Position reports the ending owner’s equity, Taken directly
from the Statement of Changes in Equity.
d. The Statement of Cash Flows Reports the net increase and decrease in cash during the period and
ends with the cash balance reported in the Statement of Financial Position.