Preparation of Financial

Statements
ACCOUNTING CYCLE
Communication
How much did the business
earn?
What is the financial
condition of the business?
How much is the owner’S
equity in the entity today?
What happened to the cash
receipts?
Where did the cash go?
Financial information useful
to a wide range of users in
making economic decisions
Financial Statements

Per revised International

Accounting Standards (IAS) No. 1,
a complete set of financial
statements comprises:
 Financial Statement
1. Statement of Financial Position
2. Statement of Comprehensive Income
3. Statement of Changes in Equity
4. Statement of Cash Flows
5. Notes to the Financial Statements (a
summary of significant accounting policies
and explanatory information)
Statement of Financial Position
preparing the financial statements

Balance Sheet
A statement that shows the financial
position or condition of an entity by
listing the assets, liabilities and
owner's equity as at a specific date.
preparing the financial statements

Balance Sheet
The information needed in for the
balance sheet items are the net balances
at the end of the period.
Also known as Statement of Financial
Position.
preparing the financial statements

Balance Sheet
Used for evaluation of a company's
liquidity, financial flexibility, and
solvency.
preparing the financial statements

Balance Sheet
• Report Format and Account Format
• Classification
 Balance Sheet
(Report Format)
Balance Sheet (Account Format)