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FAC1601 FINANCIAL ACCOUNTING AND REPORTING LECTURES NOTES
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FAC1601 FINANCIAL ACCOUNTING AND REPORTING LECTURES NOTES
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FAC1601FINANCIAL ACCOUNTING AND REPORTING
LECTURES NOTES
, A: TYPES OF FINANCIAL STATEMENTS AND NOTES
International Accounting Standards Board IAS1 as per IFRS:
Statements required by IAS1:
– Statement of financial position: shows the financial standing
[assets, equity and liabilities] of an entity at a specific date.
– Statement of profit or loss and other comprehensive income:
shows the financial result [difference between income and
expenditure] for a specific financial period – normally a year.
– Statement of changes in equity: shows how equity changed
during a financial period as a result of transactions affecting capital
funds.
– Statement of cash flows: shows how cash was generated and
used in operating, investing and financing activities during the year.
– Notes to the financial statements: include accounting policies
information and additional explanatory information about the risks
and uncertainties facing the enterprise.
, B: FINANCIAL INSTRUMENTS
According to IAS 32.11, a financial instrument is any contract that gives rise to
a financial asset for one entity and a financial liability or equity for another
entity.
Categories of financial instruments:
Financial asset held for trading at fair value through profit or loss:
Example: - Shares held for speculative purposes (Listed investments)
- This is disclosed as “Other financial assets” under the
Current Asset section of the SOFP.
- Movements will be reflected in SOP or L&OCI as
“Other income”
Financial asset at fair value through other comprehensive income:
Example: - Investment in equity instruments (Unlisted investments)
- This is disclosed as “Financial assets” under the
Non -Current Asset section of the SOFP.
, STUDY UNIT 2
ESTABLISHMENT AND FINANCIAL STATEMENTS OF A
PARTNERSHIP
(APPROPRIATION ACC)
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