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Unit 1

The document outlines the purpose of financial reporting, emphasizing its role in providing useful information for external users to make resource allocation decisions. It details various accounting subdisciplines, the distinction between internal and external users, and the basis of accounting (accrual vs. cash). Additionally, it describes the components of financial statements and the process of creating consolidated financial statements.

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mohamedgamalksa
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6 views4 pages

Unit 1

The document outlines the purpose of financial reporting, emphasizing its role in providing useful information for external users to make resource allocation decisions. It details various accounting subdisciplines, the distinction between internal and external users, and the basis of accounting (accrual vs. cash). Additionally, it describes the components of financial statements and the process of creating consolidated financial statements.

Uploaded by

mohamedgamalksa
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
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Unit one

Financial Reporting Purpose


Provide information that is useful for external users in making decisions about
providing resources to reporting entities

Accounting
Subdisciplines

Board of directors Investors

Internal users External users


Creditors

Basis of
Employees accounting advisors

Users of
Financial Stock Exchange
Statements

Regulations

Diversity and
Inclusion

1
Unit one

Continued

Accounting
Subdisciplines

Reporting External Financial


Users Accounting Accounting

Basis of
accounting
Accounting
Subdisciplines

Recognized revenue Recognized revenue


Accrual Basis Cash Basis
when earned & when cash collected &
Expense when incurred Expense when cash paid

2
Unit one

Components of Financial Statements


Current

Non Assets Revenue


Current

Current Balance sheet Income


Liabilities Expenses
Statement
Non
Current
Equity Gains

Financial
Statements Loss

Operating activities Common stock

Cash Flow Statement of


investment activities Preferred stock
Statement changes in
Equity

Financing activities Retained earning

Other comprehensive
income

treasury stock
Unit one

Consolidated Financial Statements

All items line of the


assets the liabilities All item lines of
subsidiary are added subsidiary added item
item by item with by item with parent
parent Balance sheet

The equity of subsidiary


Net income of parent
eliminated from
presented separately
consolidated balance
from net income of
sheet
Consolidated parent
Financial
Statements

All item lines of


subsidiary added item
by item with parent e Income (OCI)

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