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
How to work out profit before tax?
Gross profit - Distribution costs - Admin costs - Finance Costs
What are finance costs?
Interests of liabilities - go on the SPL
How to work out Profit for the year
Profit before tax - Income tax expense
How do you work out retained earnings for the year
Retained earnings bought forward previous period end + Profits for the year - Dividends
How to work out share capital
Number of shares x Share price
How to work out profit for year
Retained earnings gain + Dividends
What needs to be shown on the face of the statement of PL. other comprehensive income
revenue
gains and losses from the derecognition of financial assets measured at amortised cost
finance costs
share of the profit or loss of associates and joint ventures accounted for using the equity method
certain gains or losses associated with the reclassification of financial assets
tax expense
a single amount for the total of discontinued operations
