FINALYS MODULE 2: STATEMENT OF 2.

Going concern – the company has the

FINANCIAL POSITION sufficient resource to continue operations and
pay expenses.
ADDITIONAL NOTES: 3. Accrual basis of accounting
4. Materiality and aggregation
• Depreciation – is a non-cash expense; it just
declares the devaluation of an asset. • Materiality is judged based on the
account.
• The right-hand side of the balance sheet
shows the fund sources for the firm’s assets • Small amounts are grouped into
and the total liability and equity. similar insignificant accounts then
aggregated; does not require
GENERAL PURPOSE FINANCIAL STATEMENTS separate declaration of accounts.
5. Offsetting
• Structured representation of an entity’s
6. Frequency of reporting
financial position and results of its operations
(PAS 1.9). • Annual – for standard reporting
• Intended to meet the needs of users who are • Quarterly/Monthly – for updates to
not in a position to require an entity to stockholders and stakeholders
prepare reports tailored to their particular 7. Comparative information
information needs (PAS 1.7). 8. Consistency of presentation
• Cater most to the common needs of a wide • The preparation of the Financial
range of external users. Statements, in accordance to the rules
and standards must be consistent.
• External users – are indirect users who have no
influence on the preparation of the Financial • External users must interpret and
Statements analyze a consistent FS so that they
can be easily aware of the
PURPOSE OF FINANCIAL STATEMENTS operating, investing and financing
activities of the firm.
• Primary: to provide information about the
financial position, financial performance and
STRUCTURE AND CONTENT
cash flows of an entity that is useful to a
➢ Name of the reporting entity
wide range of users in making economic
decisions. o A diversified firm have strategic units
which may prepare a single FS or the
• Secondary: to show the results of
consolidated financial statements of
management’s stewardship over the entity’s
subsidiaries; often times consolidated
resources
FS are prepared annually
➢ Whether the statements are for individual or
COMPLETE SET OF FINANCIAL STATEMENTS
for a group of entities
➢ Statement of Financial Position
o Group of Entities entails consolidated
➢ Statement of Comprehensive Income and financial statements of subsidiaries
Other Comprehensive Income
➢ Date of the end or the reporting period or
➢ Statement of Changes in Equity the period covered by the financial
➢ Statement of Cash Flows statements.
➢ Notes and Comparative Information o Calendar year – ending Dec. 31
➢ The notes explain the unexplainable features o Fiscal year – depends on the
of Financial Statements. declaration of the firm.
➢ The presentation currency
GENERAL FEATURES OF FINANCIAL STATEMENTS o Requires currency
(responsibility of management) ➢ The level of rounding used
1. Fair presentation and compliance with PFRSs o (millions, hundreds; currency amounts
are rounded off to be easily
interpreted.)
SAMPLE 1:

SAMPLE 3:

SAMPLE 2:
SAMPLE 4: SAMPLE 6:

PRESENTATION (in order of liquidity)

➢ Classified – shows distinctions between

current and non-current assets and liabilities
➢ Unclassified – no distinction shown

Classified presentation should be used

except when unclassified presentation
provides information that is reliable and
more relevant.

COMPARISON BETWEEN CURRENT ASSETS AND

CURRENT LIABILITIES
(CONT.) STRUCTURE AND CONTENT
Current Assets Current Liabilities
➢ PAS 1 does not prescribe the order or format
• Cash or cash equivalent, • Expected to be settled
of presenting items in the statement of unless restricted within 12 month or the
financial position. • Expected to be normal operating cycle,
➢ Entities may modify the descriptions used realized, sold, or whichever is longer
and the sequence of their presentation to suit consumed within 12 • Held primarily for
the nature of the entity and its transactions. months or the normal trading
operating cycle, • Entity does not have an
whichever is longer unconditional right to
SAMPLE 5:
• Held primarily for defer settlement of the
trading liability for at last 12
months after the
reposting period.

Exceptions: Deferred tax assets and deferred tax

liabilities are presented as non-current items in a
classified statement of financial position.