Corpuz, Jervin D.

R
BSA 3
BSA 301 Seatwork

1. Financial statements are reports wherein it is prepared by a company's management to present the financial
performance and status in a set of documents at a specific point of time.
2. General purpose financial statements are issued throughout the year and includes a balance sheet, income
statement, statement of owner’s equity/retained earnings, and statement of cash flows. It is a report of or
reports that provides financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions.
3. The components of financial statements are Income Statement, Balance Sheet, Cash Flow Statement,
Statement of Comprehensive Income, and Statement of Changes in Equity.
4. The objective of financial statements is the information being provided to ascertain the financial position,
profitability and performance, to determine the cash inflows and outflows, to determine the results of
business operations, and etc.
5. To meet the objective of financial statements the information that is necessary, it should be
commensurable, suitable, dependable and intelligible when it comes to providing information about the
results of operations, financial position, and etc.
6. Financial position is the account status of a firm's or individual's assets, liabilities, and equity positions as
reflected on its financial statement. Financial performance is the overall measure of how well a company
uses its business assets and generates revenues. And lastly, cash flows of an entity refer to the inflow and
outflow of cash and cash equivalents.
7. Financial reporting can be defined as a set of documents prepared generally by companies or government
agencies at the closing of an accounting year.
8. The objective of financial reporting under the Conceptual Framework for Financial Reporting is to provide
information that is helpful to present and potential investors, creditors, and other users in assessing the
amounts, timing, and uncertainty of future cash flows like entity’s assets, liabilities, equity, income and etc.
9. The specific objectives of financial reporting are first objective is the most general and is to provide
information that is useful in making investment and credit decisions. Next is to provide information that is
useful in assessing the amount, timing, and uncertainty of future cash flows. And providing information
about the enterprise’s resources, claims to those resources, and how both the resources and claims to
resources change over time.
10. The limitations of financial reporting are normalized earnings, timing issues, debt repayments, valuing of
assets, capitalizing expenses and notes to the financial statements.
11. The responsibility of preparing and presenting of financial statements rests in the hand of the management
which means that it is their responsibility to provide a snapshot of a corporation's financial health, giving
insight into its performance, operations, and cash flow.
12. The fair presentation of financial statements means we now have a basis for the interpretation of the
financial statements. Fair presentation requires the faithful representation' of effects of transactions in
accordance with definitions and recognition criteria set out in the Framework.
13. Going concern is an underlying assumption in the preparation of financial statements that is assumed will
meet its financial obligations when they become due.
14. Accrual basis of accounting is a form of accounting method where financial transactions like revenues and
expenses are recorded as and when they occur regardless of when payment for the same is received or
made.
15. Materiality are items that have impact on a user's decision are termed as Material. Aggregation is a process
in which data from many of an individual's or household's financial accounts are collected in one place.
16. The new definition of materiality based on IASB is that information is material if omitting, misstating or
obscuring it could reasonably be expected to influence decisions that the primary users of general purpose
financial statements make on the basis of those financial statements, which provide financial information
about a specific reporting entity.
17. It is a rule that simplifies the calculation of lump sum damage awards to compensate victims for an
expected lost future flow of income.