- the means by which the information accumulated and processed in financial accounting is periodically communicated.
General purpose financial statements
-PAS1 prescribes to ensure comparability both with the entity’s financial statements of previous periods and with the financial statements of other entities. -statements intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs.
Components of financial statements
1. Statement of financial position
2. Income statement
3. Statement of Comprehensive Income
4. Statement of Changes in Equity
5. Statement of Cash Flows
6. Notes comprising a summary of significant
accounting policies and other explanatory
objectives of financial statements
-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.
General features of financial statements
An entity preparing PFRS financial statements is presumed to be a going concern. If management has significant concerns about the entity’s ability to continue as a going concern, the uncertainties must be disclosed. If management concludes that the entity is not a going concern, the financial statements should not be prepared on a going concern basis, in which case PAS1 requires a series of disclosures.
Accrual Basis of Accounting
PAS1 requires that an entity prepare its financial statements, except for cash flow information, using the accrual basis of accounting.
Materiality and Aggregation
Each material class of similar items must be presented separately in the financial statements. Dissimilar items may be aggregated only if they are individually immaterial.
Assets and liabilities, and income and expense, may not offset unless required of permitted by a Standard or an Interpretation.
Frequency of Reporting
An entity shall present a complete set of financial statements at least annually.
PAS 1 requires that comparative information shall be disclosed in respect of the previous period for all amounts reported in the financial statements, both face of financial statements and notes, unless another Standard permits or requires otherwise.
Consistency of Presentation
The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances of requirement of a new PFRS.
Measurement of elements
-process of determining the monetary amounts at which the elements of FS are recognized and carried in the statement of financial position and income statement.
Measurement base on financial attributes
1. Historical cost- amount paid or the face value of the consideration given to acquire assets at the time of acquisition. 2. Current cost- amount that would have to be paid if the same or an equivalent asset was acquired currently. 3. Realizable value- amount that would currently be obtained by selling the asset in an orderly disposal. 4. Present value- discounted value of the future net cash inflows that the item is expected to generate in the normal course of business.
CHAPTER 2: STATEMENT OF FINANCIAL POSITION
The Statement of Financial Position Elements
An asset is a resource controlled by the entity as a result of the past events and from which future economic benefits are expected to flow the entity.
A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Equity is the...