Introduction to published accounts Flashcards
What complete set of financial statements comprises the IAS 1 Presentation of Financial Statements
- a statement of financial position
- either:
- a statement of profit or loss and other comprehensive income, or
- a statement of profit or loss plus a statement showing other comprehensive income
- a statement of changes in equity
- a statement of cash flows
- accounting policies and explanatory notes
What does exceptional items mean?
- is the name often given to material items of income and expense of such size, nature of incidence that disclosure is necessary in order to explain the performance of the entity.
Examples of Exceptional items
- write down of inventories to net realisable value
-impairment of property, plant and equipment - restructuring costs
-gains/losses on disposal of non-current assets
-discontinued operations - litigation settlements
- reversals of provisions
Non-current assets
- Property, plant and equipment
- Investments
- Intangibles
Current assets
- Inventories
- Trade receivables
- Cash and cash equivalents
-Asset held for sale
Equity
- Share capital
- Share premium
- Revaluation Surplus
- Retained earnings
- Investment reserve
Non-current liabilities
- Long-term borrowings
- Deferred tax
Current liabilities
- Trade and other payables
- Short-term borrowings
- Current tax payable
- Short-term provisions
Order of accounts in statement of profit or loss and other comprehensive income
- Revenue
- Cost of sales
- Gross profit
- Distribution costs
- Administrative expenses
- Profit from operations
- Finance costs
- Investment income
- Profit before tax
- Income tax expense
-Profit for the year
Other comprehensive income - Gain/loss on revaluation (IAS 16)
- Gain/loss on fair value through other comprehensive income financial assets (IFRS 9)
Total comprehensive income for the year
What is the financial aim of profit-oriented sector?
Make a profit and increase shareholder wealth.
What is the financial aim of not-for-profit/public sector?
To achieve value for money/provide service.
Is external finance available for profit-orientated sector?
Yes, freely in the form of loans and share capital
Is the finance available for non-profit/public sector?
It is limited to donations/ government subsidies
What are the accounting standards designed to?
- measure financial performance accurately and consistently
- report the financial position accurately and consistently
- account for the directors’ stewardship of resources and assets
What are the accounting standards designed to in not-for-profit and public sector entities?
- do not aim to achieve a profit but have to account for their income and costs
- have to account for their effectiveness, economy and efficiency
- do not have to produce financial statements for the public ( but in many cases may do so)
