FINANCIAL

STATEMENTS
 TOPIC 2: FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
 Means by which the information accumulated and processed in financial accounting is periodically
communicated to the users.
GENERAL PURPSE FINANCIAL STATEMETNS
 Statements that have been prepared for use by those who are not in a position to require an enitity to prepare
reports tailored to their particular information needs.
COMPLETE SET of FINANCIAL STATEMENTS
 Statement of Financial Position
 Statement of Financial Performance
 Statement of Comprehensive Income
 Statement of Changes in Owners’ Equity
 Statement of Cash Flows
 Notes, comprising a summary of significant accounting policies and other explanatory information
STATEMENT of FINANCIAL POSITION
 Also known as the ‘Balance Sheet’
 A formal statement showing the three elements comprising financial position, namely assets, liabilities and
equity.
o ASSETS – a resource controlled by the entity as a result of past transaction and event and from which
future economic benefits are expected to flow to the entity.
 CURRENT ASSETS
 Resources that will be used for current operations or within the current operating cycle
o Cash
o Notes Receivables
o Accounts Receivables
o Inventories
o Prepaid Expenses
 NON-CURRENT ASSETS
 Residual Definition. Meaning, an entity shall classify all other assets not classified as
current as noncurrent.
o Property Plant and Equipment
o Long-Term Investments
o Intangible Assets
o LIABILITIES – debts and other financial obligations that a business has. Defined as a present obligation
of an entity arising from past transaction or event, the settlement of which is expected to result in an
outflow from the entity of resources embodying economic benefits.
 CURRENT LIABILITIES
 Obligations of the entity that will mature or need to be paid within the current
accounting period.
o Notes Payable
o Accounts Payable
o Current portion of a long-term debt
 NON-CURRENT LIABILITIES
 TOPIC 2: FINANCIAL STATEMENTS
Residual Definition. Meaning, and entity shall classify all other liabilities not classified
as current as noncurrent.
o Noncurrent portion of long-term debt
o OWNERS’ EQUITY – represents the share of the owner in the business. It is also the residual interest in
the assets of the entity after deducting all of its liabilities.
 Report Form

Simon Enterprises
Statement of Financial Position
December 31, 2019

Assets

Cash Php 150,000.00

Accounts Receivable 200,000.00
Total Assets Php 350,000.00

Liabilities and Owner's Equity

Notes Payable Php 70,000.00

Accounts Payable 120,000.00
Simon, Capital 160,000.00
Total Liabilities and Owner's Equity Php 350,000.00
 Account Form
Simon Enterprises
Statement of Financial Position
December 31, 2019

Assets Liabilities and Owner's Equity

Cash Php 150,000.00 Notes Payable Php 70,000.00

Accounts Receivable 130,000.00 Accounts Payable 120,000.00
Merchandise Inventory 70,000.00 Simon, Capital 160,000.00
Total Assets Php 350,000.00 Total Liabilities and Owner's Equity Php 350,000.00
 TOPIC 2: FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL PERFORMANCE
 Also known as the “Income Statement”
 Formal statement showing the financial performance of an entity for a given period of time.
 Financial performance is primarily measured in terms of the level of income earned by the entity through the
effective and efficient utilization of its resources.
 Service Type

Simon Enterprises
Statement of Financial Performance
December 31, 2019

INCOME
Professional Fee PHP 120,000.00

EXPENSES
Salaries Expense PHP 11,000.00
Advertising Expense 6,000.00
Rent Expense 2,000.00
Utilities Expense 4,000.00 -23,000.00
NET INCOME PHP 97,000.00

 Merchandising/Manufacturing

EXAMPLE COMPANY
Statement of Financial Performance
December 31, 2019

Net Sales PHP 1,500,000.00

Less: Cost of Goods Sold 750,000.00
Gross Profit PHP 750,000.00
Less: Selling and Admin Expenses 100,000.00
Operating Profit PHP 650,000.00
Less: Interest Expense 20,000.00
Income Before Taxes PHP 630,000.00
Less: Tax Expense (Assuming 30% Tax Rate) 189,000.00
Net Income After Taxes PHP 441,000.00
Less: Preferred Stock Dividends 220,000.00
Earnings Available to Common Share Holders PHP 221,000.00
 TOPIC 2: FINANCIAL STATEMENTS
 COST OF GOODS SOLD (MANUFACTURING)

EXAMPLE COMPANY
Statement of Cost of Goods Sold
December 31, 2019

Direct Materials PHP 150,000.00

Direct Labor 350,000.00
Factory Overhead 100,000.00
Total Manufacturing Cost PHP 600,000.00
Work in Process, Beginning 250,000.00
Total Cost of Goods Put into Process PHP 850,000.00
Less: Work in Process, Ending 70,000.00
Total Cost of Goods Manufactured PHP 780,000.00
Finished Goods, Beginning 35,000.00
Total Cost of Goods Available for Sale PHP 815,000.00
Less: Finished Goods, Ending 65,000.00
Total Cost of Goods Sold PHP 750,000.00

 COST OF GOODS SOLD (MERCHANDISING)

EXAMPLE COMPANY
Statement of Cost of Goods Sold
December 31, 2019

Beginning Inventory PHP 125,000.00

Purchases 800,000.00
Total Cost of Goods Available for Sale PHP 925,000.00
Less: Ending Inventory 175,000.00
Total Cost of Goods Sold PHP 750,000.00