Scribd
Upload
191 views2 pages

Introduction To Financial Reporting

This document provides an introduction to financial reporting, including the objectives of financial reporting and the users of financial statements. It discusses the purpose of the main financial statements: the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. It also covers the elements of financial statements, such as assets, liabilities, equity, income and expenses. Finally, it outlines general features and principles for preparing financial statements, such as fair presentation, going concern assumption, accrual basis of accounting, materiality and aggregation.

Uploaded by

Mariel Diaz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
191 views2 pages

Introduction To Financial Reporting

This document provides an introduction to financial reporting, including the objectives of financial reporting and the users of financial statements. It discusses the purpose of the main financial statements: the statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows. It also covers the elements of financial statements, such as assets, liabilities, equity, income and expenses. Finally, it outlines general features and principles for preparing financial statements, such as fair presentation, going concern assumption, accrual basis of accounting, materiality and aggregation.

Uploaded by

Mariel Diaz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

INTRODUCTION TO FINANCIAL REPORTING

Chapter Overview and Objectives


1. The objective of financial reporting and the different users of financial information.
2. The purpose of the financial statements
3. The complete set of financial statements
4. The elements of financial statements
5. The general features and concepts when preparing financial statements

1.1 | OBJECTIVE OF FINANCIAL REPORTING


According to the Conceptual Framework, the objective of general-purpose financial reporting is:

"To provide financial information about the reporting entity that is useful to existing and potential
investors, lenders, and other creditors in making decision relating to providing resources to the entity"

1.2 | Users of General-Purpose Financial Reports

How they use the general-purpose financial reports?


Investors ---------> Existing Investors - returns and or increase in the FV of the investment; Potential Investor - whether to acquire the shares of an entity.
Primary Users Lenders Existing Lenders - the ability of an entity to pay back the amounts they previously lent to the enity, plus interest as they become due.
--------->
Other creditors Potential Lenders - to lend funds or not to an entity

Employees ---------> Job security; The additional compensation based on profit-sharing.


Suppliers ---------> If they can still make business with the entity.
Other Users Government ---------> Ascertaining the entity's tax liabilities (BIR); Compliance with information disclosure requirements (SEC)
Customers ---------> Ability of an entity to continue supporting its products.
Researchers ---------> For their own analysis that may supplement the decision-making of primary users of the FS.

2.0 | PURPOSE OF FINANCIAL STATEMENTS

According to PAS 1, Presentation of Financial Statements , the objective of 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."

3.0 | COMPLETE SET OF FINANCIAL STATEMENTS


According to PAS 1, a complete set of financial statements comprises:
a. a statement of financial position as at the end of the period;
b. a statement of profit or loss and other comprehensive income (OCI) for the period;
c. a statement of changes in equity for the period;
d. a statement of cash flows for the period;
e. notes to financial statements;
f. comparative information in respect of the preceding period; and
g. a third statement of financial position as at the beginning of the preceding period shall be presented

4.0 | ELEMENTS OF FINANCIAL STATEMENTS


According to the Revised Conceptual Framework:
a. Assets - a present economic resource controlled by the entity as a result of past events.
b. Liability - a present obligation of the entity to transfer an economic resource as a result of past events.
c. Equity - the residual interest in the assets of the entity after deducting all its liabilities.
d. Income - increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.
e. Expense - decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

5.1 | GENERAL FEATURES AND PRINCIPLES IN PREPARING FINANCIAL STATEMENTS

a. Fair presentation and compliance with PFRSs

b. Going Concern Assumption


Source: https://www.abs-cbn.com/investors/annual-reports/latest-annual-report/2020-annual-report/id-510

c. Accrual Basis of Accounting


Income or Revenue - are recognized when earned, regardless of their receipt
Expenses - are recognized when incurred, regardless of their payment

d. Materiality and Aggregation

Aggregation
a. An entity shall present separately each material class of similar items.
Statement of Financial Position
b. An entity shal present separately items of a dissimilar nature or functions unless they are immaterial.

c. if a line item is not individually material, it is aggregated with other items either in the financial statements or in the notes

d. An item that is not sufficiently material to warrant separate presentation in those statements may warrant separate presentation in the notes.

Materiality
Materiality depends on the nature or magnitude of information, or both.

e. Offsetting

f. Frequency of reporting

g. Comparative Information

h. Consistency of presentation

5.2 | IDENTIFICATION OF THE FINANCIAL STATEMENTS


Source: PSE Edge website

c d
e

Tickmark Explanation:
a Name of the reporting entity
b Level of rounding of amounts and the presentation currency
c Information is about a group of entities
d Information is about an individual entity
e Dates of the reporting periods

- End of our discussion -

You might also like