SELF REFLECTION

1. What are financial statements?

Financial statement summaries the Businesses transaction and its written record that
convey business activities and financial performance that provides useful information to
business users and the financial statement have a five major accounts the asset,
liabilities, equity, income and expenses, and has 4 component, the statement of financial
position, statement of financial performance, statement of changes in owners’ equity
and the statement of cash flows

2. What are the components of financial statements? Explain

The first component big financial statement is the statement of financial position also
known as a balance sheet it shows the reporting of assets, liabilities and equity means it
is the list of the resources, obligation and ownership of a company.

Income statement is also known as statement of financial performance in this

component of financial position it represents the report of revenue and expenses. If
there is excess of revenue over expense it will show the profit of the business and when
expenses are more than the income there will be a loss.

Statement of changes in equity it’s all about the showing of the flow of equity, by
showing the flow of equity we will able to determine the increase and decrease of
equity. Equity will increase when there is an additional investment of owner and when
business result to net income. Decrease will occur in equity when business result in a
net loss and drawings and the statement of changes equity shows the movement in the
equity
Section of the statement of financial position

Statements of cash flows are a useful addition to the financial statements of an entity
because accounting profit is not the only indicator of performance. Statements of cash
Flows show the sources and uses of cash and are a useful indicator of an entity’s
liquidity And solvency, this component of financial statement is all about the flow of cash
the cash inflow will determine when the money is go in the business and cash outflow
is all about the decrease of cash because of payment

3. What is asset and its essential characteristics?

Assets are probable future economic benefits obtained or controlled by a particular
entity as a result of past transactions or events. And asset can be intangible or tangible
an asset has three essential characteristics first it embodies a probable future economic
benefit that involves a capacity, singly or in combination with other assets, to contribute
directly or indirectly to future net cash inflows, second a particular entity can obtain the
benefit and control others for accessing those benefits, and lastly the transaction or
other event giving rise to the entity’s right to or control of the benefit has already
occurred.

4. Give examples of current and non-current assets.

The Current asset are accounts receivable, notes receivable ,cash ,prepaid rent, prepaid
supplies, prepaid insurance, inventories
 The non-current asset are land, building, furniture and fixture, and equipment or
referred to as “property, plant and equipment”

5. Define liabilities.
Liabilities is defined as the present obligation of the business and result to the entity to
give up or sacrifice an economic benefits. And the liabilities includes all the payable of
one entity.

6. Give examples of current and non-current liabilities.

Examples of current liabilities are accounts payable, notes payable and accursed
liabilities
Example of non-current liabilities is the mortgage payable

7. What is the meaning of notes to financial statements?

Notes to financial statement is the last component of financial statement also known as
footnotes, these provide additional information in others component of financial
statement, (balance sheet, income statement, statement in changes in equity, statement
of cash flow).The notes are required by the full disclosure principle and this is also the
detailed of other components of FS

8. Identify components of other comprehensive income.

 Other comprehensive income comprised of revenues, expenses, gains or losses
 Revaluation of surplus during the year.
 Gains and losses arising from translating the financial statements of a foreign operation
 Re-measurement of the net defined benefit asset
 Unrealized gain or loss on equity and debt investment measured at FV through other
comprehensive income

9. Explain the tow options of presenting comprehensive income.

Single Statement of comprehensive income is the combined statementshowing the
component of profit and loss and other component of comprehensive income through
single statement

Two Statement of comprehensive income also show the component of profit and loss
and the statement of comprehensive income statement with the profit or loss as shown
in the statement of financial performance plus or minus the component of other
comprehensive income

10. Define a statement of changes in equity.

Statement of changes in equity shows the change in an owners or shareholders equity
throughout the accounting period. In financial statement the statement of changes in equity
summaries the transaction that is related to the owner’s equity.
ACTIVITY: CONCEPT MAP OF PAS 1
PURPOSE OF FINANCIAL
STATEMENT
•to provide information about
financial position, performance and
cash flow of an entity that is useful
to a wide range of users in making
economic decision
•to show result of management’s
stewardship over entity’s resources
STATEMENT OF
FINANCIAL
POSITION
-also known as balance sheet
-shows the entity’s financial
condition
 ASSET
 LIABILITIES
 EQUITY
•PRESENTATION OF STATEMENT OF
FINANCIAL POSITION
a) classified
b) unclassiified
•asset and liabilities is split
between current and non- current
•refinancing agreement
•liabilities payable on demand
FINANCIAL
STATEMENT
PRESENTATION OF
FINANCIAL STATEMENT
STATEMENT OF PROFIT OR
LOSS AND OTHER
COMPREHENSIVE INCOME
•also known as income statement or
statement of financial performance
 income
 expenses
•single or two statement
•shows the total comprehensive
income made up of profit or loss and
other comprehensive income
•presentation of expense is
classified in two method the nature
of expense method and function of
expense method
NOTES TO FINANCIAL
STATEMENT
GENERAL FEATURE OF
FINANCIAL STATEMENT
•FAIR PRESENTATION AND
COMPLIANCE WITH PFRS
•GOING CONCERN
•ACCRUAL BASIS OF ACCOUNTING
•MATERIALITY AND AGGREGATION
•OFFSETTING
•FREQUENCY OF REPORTING
•COMPARATIVE INFORMATION
STATEMENT IN
CHANGES IN
EQUITY
•show the flow of equity
 net income or net loss
- Total comprehensive income for the
period
- For each component of equity, a
reconciliation between the carrying
amount at the beginning and the end
of the period, showing separately
changes resulting from
I. Profit or loss
ii. Other comprehensive income
iii. Transactions with owners