Notes for L1

Financial Statement
Objective of Financial Statement (provide info to users decision
making)
Three bases of Accounting (accrual, cash, breakup)
Fundamental Accounting (entries/concepts)

i. Statement of Profit or Loss for the year ended 31 December 2022

1/1/2022 31/12/2022
Income Statement is

ii. Statement of Financial Position as at 31 December 2022

1/1/2022 31/12/2022
Balance sheet is when company started

 b/f from previous year +/(-) trxn during the year = c/f to next year 

Journal entry
BS – Asset (Dr. bal) BS – Liability/Equity (Cr. bal)
XX XX

IS – Revenue/Gain (Cr. bal) IS – Expenses/Loss (Dr. bal)

XX XX

Conceptual Framework
Qualitative Characteristics (Fundamental vs Enhancing)
Five Elements of Financial Statement
Recognition
Measurement (4 measurement bases)
Going Concern and Substance over form
Inherent limitation of financial statements

Prepared by : cygan 1
Prepared by : cygan 2
Ethics and Professional Issues
Fundamental principles: Integrity, Objectivity, Professional competence
and due care, confidentiality, professional behaviour.
Threats: Self-interest threat, self-review threat, advocacy threat,
Familiarity threats, Intimidation threat.
Safeguard: by profession, legislation and regulation; in work environment
General duty to report

IAS 1 Presentation of Financial Statements

Purpose
Components of financial statements
i. Statement of financial position
ii. Statement of profit or loss and other comprehensive income
iii. Statement of changes in equity
iv. Statement of cash flows
v. Notes
Requirements
i. Fair presentation
ii. Going concern
iii. Accrual basis of accounting
iv. Consistency of preparation
v. Materiality and aggregation
vi. Offsetting
vii. Comparative information
viii. Disclosure of accounting policies
Classification of Expenses
i. By function (eg. Cost of sales, Distribution cost, Administrative
expenses etc.)
ii. By nature (eg. Raw material and consumables used, employee benefit
expenses, depreciation etc.)

Prepared by : cygan 3
Prepared by : cygan 4
IAS 8 Accounting Policies, Accounting Estimates, Errors

MFRS140

Cost model to revaluation model Change in useful life of

PPE
FIFO to weighted average

dont hv to adjust prior year, just

Retrospective approach: adjust from now
Identify date of transaction change from day 1
Find financial impact from date of transaction to date of change
Adjust financial impact through RE b/f
Restate comparative figures

Error

Prepared by : cygan 5