Chapter 1 - Introduction To Published Accounts

Question 1

IAS Presentation of Financial Statements

Answer 1

A complete set of financial statements comprises:

1. A statement of financial position.
   - A statement of profit or loss and other comprehensive income.
   - A statement of profit or loss plus a statement showing other comprehensive income.
2. A statement of changes in equity.
3. A statement of cash flows.
4. Accounting policies and explanatory notes.

Question 2

Not for profit and public sector entities

Answer 2

1. Profit oriented sector
   - financial aim to make profit and increase shareholder wealth.
   - directors are accountable to shareholders.
   - external finance available in the form of loans and share capital.
2. Not for profit/ public sector
   - financial aim to achieve value for money/ provide service.
   - managers are accountable to trustees/ government/ public.
   - finance limited to donations/ government subsidies.

Question 3

Accounting standards and not for profit and public sector entities.

Answer 3

1. Accounting standards are designed to:
   - measure financial performance accurately and consistently.
   - report the financial position accurately and consistently.
   - account for the directors stewardship of the resources and assets.
2. Not for profit and public sector organisations:
   - do not aim to achieve a profit but have to account for their income and costs.
   - account for their effectiveness, economy and efficiency.
   - do not have to produce financial statements for the public.