Financial Statements for Management use

Comprehensive Income Statement

City Trading Ltd

Statement of Comprehensive Income
for the year ended 31 December 2021
$ $ $
Sales revenue XX
Less Sales returns XX XX
Less Cost of sales
Inventory (1.1.31) XX
Purchases XX
Less Purchases returns XX
XX
Add Freight inwards XX XX
XX
Less Inventory (31.12.31) XX XX
Gross profit XX
Add other income
Discount revenue XX
Dividend revenue XX
Rent revenue XX
interest revenue XX XX
XX
Selling and Distribution expenses
Sales staff salaries and wages XX
Sales staff overtime allowance XX
Sales staff gratuity expenses XX
Sales staff long service leave expenses XX
Superannuation contribution sales staff - Employer's
contribution XX
Sales staff commission expenses XX
Security expense - sales building XX
Advertising expenses XX
Delivery vehicle maintenance expenses XX
Depreciation - Delivery vehicle XX
Depreciation - sales office furntiure XX
Freight outwards XX
Sales office electricity expenses XX XX

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Administrative expenses
Office staff Salaries/wages XX
office staff overtime allowance XX
Superannuation contribution office staff - Employer's
contribution XX
Office staff gratuity expenses XX
Fuel expenses for office vehicle XX
Depreciation expense - Admin building XX
Deprecaition expense - office equipment XX
Depreciation expense - office furniture XX
Depreciation expense - office vehicle XX
Directors remuneration XX
Auditors fees XX
Stationery expenses XX
Admin Building electricity expenses XX
General maintenance expenses XX
Admin Building Utilites (water/telephone) XX
Admin Building insurance XX
Management staff rent expenses XX XX
Finance Expenses
Discount expense XX
Bad debt expense XX
Doubtful debt expense XX
interest expense XX XX XX
Operating profit before tax XX
Tax XX
Operating profit after tax XXX

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 Statement of changes in equity

City Trading Ltd

Statement of Changes in Equity
for the year ended 31 December 2021
Asset
Share General Retained
revaluation Total
Capital reserve profit
reserve
Balance (1.1.2021) XX XX XX XX
Net profit for the year XX
Transfer XX XX (XX) XX
Dividends (XX)
XX XX XX XX XX

Statement of Financial Position

City Trading Ltd

Statement of Financial Position
as at 31 December 2021
$ $ $
Non current assets
Land XX
Building XX
Less: Accumulated Depreciation XX XX
Equipment XX
Less: Accumulated Depreciation XX XX
Furniture and Fittings XX
Less: Accumulated Depreciation XX XX
Motor Vehicle XX
Less: Accumulated Depreciation XX XX
Other investments in Financial Assets XX
Intangible assets
Goodwill XX
Patent XX XX XX

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Current assets
Inventories XX
Accounts receivable XX
Less: Provision for doubtful debts XX XX
Accrued revenue XX
Prepaid expenses XX
Short term investments XX
cash at bank XX
Petty cash XX
GST claimable XX XX
XX
Equity
Share Capital XX
Reserve XX
Retained profit XX XX
Non-Current liabilities
Debentures XX
Bank loan XX XX
Current liabilities
Accounts payable XX
Accrued expenses XX
bankoverdraft XX
Unearned revenue XX
GST payable XX
Tax payable XX
Dividend payable XX
Payroll tax deductions payable XX XX
XX

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 General Purpose Financial Statements
Comprehensive Income Statement

XYZ Ltd
Statement of Comprehensive Income
for the year ended 31 December 2021
(in thousand of SBD)
Note $ $
Sales revenue³ 1 XX
Cost of sales 2 (XX)
Gross profit XX
Other Income 3 XX
XX
Selling and Distribution expenses 4 XX
General and Administrative expenses 5 XX
Other expenses 6 XX
Finance Expenses 7 XX (XX)
Operating profit before tax XX
Income tax (XX)
Operating profit after tax XX
Other comprehensive income:
Exchange differences on translating foreign operation 8 XX
Gains on property revaluation⁴ 9 XX
Income tax relating to components of other comprehensive (XX) XX
Total comprehensive income for the year XX

The following points are important to note:

1. Sales revenue: - Sales revenue means gross sales minus returns. If the break-up of
sales revenue is given in the question, provide composition of sales revenue as a
note. This may include domestic sales and export sales revenue.

2. Cost of sales: - Provide components of cost of sales as a note.

3. Other income: - Other income may include items such as interest, dividend and rent.
Total is included on the surface of the statement and composition is given as a note.

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4. Selling and Distribution expense: - This consist of expenses relating to sales, sales
promotion and selling and distribution of products sold. These expenses are
incurred by the marking department of the company.

5. General and Administrative: - General and Administration expenses includes the

expenses incurred by the administration office. Broadly they relate to administration
office, maintenance of building etc……

6. Finance expenses: - All expenses pertaining to acquiring finance is classified as

finance costs.

7. Other expenses: - The expense items that cannot be classified as distribution,

administration and finance are classified as other expenses. E.g.
i. Goodwill impairment loss,
ii. Loss on sale of non-current assets
iii. Loss of fire/theft/flood.

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 Statement of changes in equity

XYZ Ltd
Statement of Changes in Equity
For the year ended 31 December 2021

Share Revaluation General Retained

Note Total
Capital Surplus reserve Earnings

Balance (1.1.2021) XX XX XX XX XX
Issue of shares 10 XX XX
Total comprehensive income for the year XX XX XX XX
Dividend 11 (XX) (XX)
Transfer (XX)
XX XX XX XX XX

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 Statement of Financial Position

XYZ Ltd
Statement of Financial Position
as at 31 December 2021
Note $ $
ASSETS
Non current assets
Property, Plant and Equipment 12 XX
Goodwill 13 XX
Other intangible assets 14 XX
Investments in associates 15 XX
Total non current assets XX
Current Assets
Inventories 16 XX
Accounts Receivable 17 XX
Other current assets 18 XX
Cash and cash equivalents 19 XX
Total current assets XX
Total assets XX

EQUITY AND LIABILITIES

Equity
Share capital 20 XX
Retained earnings XX
Other components of equity XX
Total equity XX
Non current liabilities
Long-term borrowings 21 XX
Defferred tax 22 XX
Long-term provisions 23 XX
Total non current liabilities XX
Current Liabilities
Accounts Payable 24 XX
Short-term borrowings 25 XX
Short-term provisions 26 XX
Current tax payable XX
Total current liabilities XX
Total equity and liabilities XX

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Notes the followings:
The important feature of general purpose financial statements is the displaying of
minimum information in summary form in financial statements and discloses further
information by way of notes. The notes form integral part of the financial statements.
IAS 1 (Para. 114) suggests that the notes should be presented in the following order.

 A statement of compliance with IFRS

 A summary of significant accounting policies applied including:
o The measurement basis (or bases) used in preparing the financial
statements,
o The other accounting policies used that are relevant to an understanding
of the financial statements.
 Supporting information for items presented on the face of financial statements
 Other disclosures, including:
o Contingent liabilities
o Unrecognised contractual commitments, and
o Non-financial disclosures, e.g. the entity’s financial risk management
objectives and policies.
All the notes basically fall into the four categories stated below. Other certain specific
information to be disclosed later.

Requirement
A statement of compliance with IFRS
The measurement basis used in preparing
the financial statements.
Supporting information for items
presented on the face of financial
statements.
Other disclosures
Examples
The financial statements have been
prepared in accordance with International
Financial Reporting Standard (IFRS)
1. The accounts have been prepared
under the Historical cost assumption.
2. Inventories are valued at the lower of
cost or net realisable value.
Revenue comprises of:
Revenue from sale of goods $150,000
Other income $210,000
Total revenue $360,000
The company has given a guarantee
agreement in respect of $4m loan
obtained by XYZ Ltd.

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