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Introduction To Financial Statements

Financial statements include a statement of financial position (balance sheet), statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. They provide information about a company's financial position, performance, and cash flows that is useful for economic decision making. The balance sheet summarizes assets, liabilities, and shareholders' equity at a point in time. The statement of profit or loss and other comprehensive income assesses financial performance over a period by showing revenues and expenses. The statement of changes in equity outlines changes in equity over time. The statement of cash flows presents cash flow movements during a period from operating, investing, and financing activities. Notes to the financial statements provide additional details.

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380 views

Introduction To Financial Statements

Financial statements include a statement of financial position (balance sheet), statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. They provide information about a company's financial position, performance, and cash flows that is useful for economic decision making. The balance sheet summarizes assets, liabilities, and shareholders' equity at a point in time. The statement of profit or loss and other comprehensive income assesses financial performance over a period by showing revenues and expenses. The statement of changes in equity outlines changes in equity over time. The statement of cash flows presents cash flow movements during a period from operating, investing, and financing activities. Notes to the financial statements provide additional details.

Uploaded by

Ralph H. Villanueva
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© © All Rights Reserved
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Introduction to

financial
statements
By
Ralph H. Villanueva
What are financial statements?
Financial statements portray the financial effects of transactions
and other events by grouping them into broad classes according
to their economic characteristics. (Conceptual Framework for
Financial Reporting 2010)

The objective of general purpose financial statements is to


provide information about the financial position, financial
performance, and cash flows of an entity that is useful to a wide
range of users in making economic decisions. (IAS 1.9)
Components of Financial
Statement
A complete set of financial statements includes: [IAS 1.10]
a statement of financial position (balance sheet) at the end of the period
a statement of profit or loss and other comprehensive income for the period
(presented as a single statement, or by presenting the profit or loss section in a
separate statement of profit or loss, immediately followed by a statement
presenting comprehensive income beginning with profit or loss)
a statement of changes in equity for the period
a statement of cash flows for the period
notes, comprising a summary of significant accounting policies and other
explanatory notes
comparative information prescribed by the standard.
The Statement of Financial
Position
A financial statement that summarizes a company's assets, liabilities and
shareholders' equity at a specific point in time. These three balance sheet
segments give investors an idea as to what the company owns and owes,
as well as the amount invested by shareholders.
The balance sheet is a snapshot, representingthe state of a company's
financesat a moment in time.
The Statement of Income and
Expenses
A financial statement that measures a company's
financial performance over a specific accounting period.
Financial performance is assessed by giving a summary of
how the business incurs its revenues and expenses through
both operating and non-operating activities. It also shows the
net profit or loss incurred over a specific accounting period,
typically over a fiscal quarter or year.
The Statement of Changes in
Equity
A financial statement outlining the changes in equity for a specified
period. The statement of changes in equity is prepared in
accordance with International Financial Reporting Standards. The
statement of retained earnings reconciles the beginning and ending
equity for the period, using information such as net income from the
other financial statements.
The Statement of Cash Flows
Statement of Cash Flows presents the movement in cash
flows over the period as classified under operating,
investing and financing activities.
Notes to Financial Statement
Additional information provided in a company's financial statements.
Footnotes to the financial statements report the details and
additional information that are left out of the main reporting
documents. This is done mainly for the sake of clarity because these
notes can be quite long, and if they were included, they would cloud
the data reported in the financial statements.
Electronic References
The International Accounting Standards. http://
www.ifrs.org/XBRL/Resources/Documents/Illustrative%20Examples%2
02013/ixbrl_example2_2013-03-28.xhtml
Investopedia Encyclopedia. http://www.investopedia.com

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