FINANCIAL STATEMENTS

Definition

Financial statements are the means by which the information accumulated and process in
financial accounting is periodically communicated to the users.

Stated differently, the financial statements are the end product or main output of the financial
accounting process.

Financial statements are a structured financial representation of the financial position and
financial performance of an entity.

(results of the operation)

General purpose financial statements

PAS 1 prescribes the basis for the preparation of “general purpose” financial statements to ensure
comparability both with the entity’s financial statements of previous periods and with the
statement of other entities.

General purpose financial statement s are those statements intended to meet the need of users
who are not in position to require an entity to prepare reports tailored to their particular
information needs.

Reports prepared at the request of an entity’s management or bankers are not general purpose
financial statements because are prepared specifically to meet the needs of management or
bankers.

Components of financial statement

A complete set of financial statements comprises the following components:

1. Statement of financial position

2. Income statement

3. Statement of comprehensive income

4. Statement of changes in equity

5. Statement of cash flows

6. Notes, comprising a summary of significant accounting policies and other explanatory

information

Many entities also present reports and statements such as environmental reports and value added
statements, particularly in industries in which environmental factors are significant and when
employees regarded as an important user group.

However, such statements and reports are not components of financial statements and therefore
outside the scope of PFRS.
Objectives of financial statements

The objective of general purpose financial statements is to provide information about the
financial position, financial performance and cash flows of an entity that is useful to a wide
range of users in making economic decisions.

Financial statements also show the result of stewardship of management of the resources
entrusted to it.

To meet objectives, financial statements provide information about the following:

a. Assets

b. Liabilities

c. Equity

d. Income and expenses, including gains and losses

e. Contribution by and contribution to the owners in their capacity as owners

f. Cash flow

Such information, along with other information in the notes, would assist users of financial
statements in predicting entity’s cash flow and in particular their timing and certainty.

However, financial statement do not provide all the information that users may need to make
economic decisions since they largely portray the financial effects of past events and do not
necessarily provide nonfinancial information.

Financial information

The financial information comprises the assets, liabilities, and equity of an entity and a
particular moment in time.

Specifically, financial position pertains to liquidity, solvency and the need of an entity for
additional financing.

This information is pictured in the statement of financial position

Financial performance

The financial performance comprises the revenue, expenses and net income or loss of an entity
for a period of time.

Performance is the level of income earned by the entity through the efficient and effective use of
its resources.

The financial performance of an entity is also known as results of operation and is portrayed in
the income statement and statement of comprehensive income.

Cash flows

Cash flows are the cash receipts and cash payments arising from the operating, investing and
financing activities of the entity. This information is presented in statement of cash flows.

Cash flow information is useful in assessing the ability of the entity to generate cash and cash
equivalents.
Financial reporting

Financial reporting is the provision of financial information about an entity to external users that
is useful to them in making economic decisions and for assessing the effectiveness of the entity’s
management.

The principal way of providing financial information to external users is through the annual
financial statements.

However, financial reporting encompasses not only financial statements but also other means
of communicating information that relates directly or indirectly to the financial accounting
process.

Financial reports include not only financial statements but also other information such as
financial highlights, summary of important financial figures, analysis of financial statements and
significant ratios.

Financial reports also include nonfinancial such as description of major products and a listing of
corporate officers and directors.

Objective of financial reporting

Under the Conceptual Framework for Financial Reporting, the objective of financial reporting is:
to provide financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions about providing resources to the
entity.

Simply stated, the overall objective of financial reporting is to provide information that is
useful for decision making.

Target users of financial reporting

The General purpose financial reporting is directed primarily to the existing and potential
investors, lenders and other creditors which compose the primary user group.

The reason is that existing and potential investors, lenders and other creditors have the most
critical and immediate need for information in financial reports.

As a matter of fact, the primary users of financial information are the parties that provide
resources to the entity.

Moreover, information that meets the needs of the specified primary users is likely to meet the
needs of other users such as employees, customers, governments and their agencies.

The management of a reporting entity is also interested in financial information about the entity.

However, management need not rely on general purpose financial reports because it is able to
obtain or access additional financial information internally.

Specific objectives of financial reporting

Specifically, the Conceptual Framework for Financial Reporting states the following objectives
of financial reporting:

a. To provide information useful in making decisions about providing resources to the entity.

b. To provide information useful in assessing the prospects of future net cash flows to the entity.
c. To provide information about entity resources, claims and changes in resources and claims.

Limitations of financial reporting

a. General purpose financial reports do not and cannot provide all of the information that existing
and potential investors, lenders and other creditors need.

b. General purpose financial reports are not designed to show the value of a reporting entity but
these reports provide information to help the primary users estimate the value of the entity.

c. General purpose financial reports are intended to provide common information to users and
cannot accommodate every specific request for information.

d. To a large extent, financial reports are based on estimate and judgement rather than exact
depiction.

Responsibility for financial statements

The management of an entity has responsibility for the preparation and presentation of financial
statements.

The Board of Directors in discharging its responsibilities reviews and authorizes the financial
statements for issue before this are submitted to the shareholders of the entity.

Management is accountable for the safekeeping of the resources and their proper, efficient and
profitable use.

Shareholders are interested in information that helps them assess how effectively management
has fulfilled this role as this is relevant to the decision concerning their investment and the
reappointment or replacement of management.

General features of financial statements

1. Fair representation and compliance with PFRS

2. Going concern

3. Accrual basis

4. Materiality and aggregation

5. Offsetting

6. Frequency of reporting

7. Comparative information

8. Consistency of presentation

Fair presentation

The financial statements shall present fairly the financial position, financial performance and
cash flows of an entity.

Virtually, in all circumstances, fair presentation is achieved if the financial statements are
prepared in accordance with the Financial Reporting Standards which represent the GAAP in the
Philippines.
The application of Philippine Financial Reporting Standards, with additional disclosure when
necessary, is presumed to result in financial statements that achieved a fair presentation.

An entity whose financial statements comply with PFRS shall make an explicit and unreserved
statement of such compliance in the notes.

Fair presentation is defined as faithful representation of the effects of transactions and other
events in accordance with the definitions and recognition criteria for assets, liabilities, income
and expenses laid down in the Conceptual Framework.

Fair presentation requires an entity:

a. To select and apply accounting policies in accordance with PFRS.

b. To present information, including accounting policies, in a manner that provide relevant and
faithfully represented financial information.

c. To provide additional disclosures necessary for the users to understand the entity’s financial
statements.

An entity cannot rectify inappropriate accounting policies either by disclosure of the

accounting policies used or by notes or explanatory information.

Departure from standard

In the extremely rare circumstances in which managements concludes that compliance with a
requirement in a standard would be so misleading, the entity shall depart from that requirement
provided the relevant regulatory Conceptual Framework requires, or otherwise does not
prohibit, such a departure.

Thus, an entity is permitted to depart from standard:

a. In extremely rare circumstances.

b. When management concludes that the compliance with the standard would be misleading.

c. When the departure from the standard is necessary to achieve fair presentation.

d. When the regulatory Conceptual Framework requires or otherwise does not prohibit such a
departure.

In such circumstances, it is incumbent upon the entity to disclose the following:

1. The management has concluded that the financial statement present fairly the financial
position, financial performance and cash flows of the entity.

2. That the entity has complied with applicable standards except that it has departed from a
particular requirement to achieve a fair presentation.

3. The title of the standard from which the entity has departed, the nature of the departure,
including the treatment that the standard that require, the why that treatment would be so
misleading and the treatment adopted.

4. For each period presented, the financial impact of the departure on each item in the financial
statements that would have been reported in complying with the requirement.

Going concern
Going concern means that the accounting entity is viewed as continuing in operation indefinitely
in the absence of evidence to the contrary.

Going concern is also known as continuity assumption.

In other words, financial statements are prepared normally in the assumption that the entity shall
continue in operation for the foreseeable future.

Thus, assets are normally recorded at original acquisition cost. As a rule, market values are
ignored.

However, some standards require measurement of certain assets at fair value.

Going concern is particularly relevant when management shall make an estimate of the expected
outcome of future events, such as the recoverability of accounts receivable and the useful life of
the noon current assets.

This postulate is the very foundation of the cost principle.

Financial statements shall be prepared on a going concern basis unless management intends to
liquidate the entity or cease trading or has no realistic option but to do so.

When upon assessment it becomes evident that there are material uncertainties regarding the
ability of the entity to continue as a going concern, those uncertainties shall be fully disclosed.

In making the assessment about going concern assumption, management shall take into account
all available information about the future which is at least twelve months from the end of the
reporting period.

If the financial statements are not prepared on a going concern basis, such fact shall be disclosed
together with the measurement basis and the reason therefor.

Accrual basis

An entity shall prepare the financial statements, except for cash flow information, using the
accrual basis of accounting.

Under accrual basis, the effects of transactions and other events are recognized when they occur
and not as cash or cash equivalent is received or paid, and they are recorded and reported in the
financial statements of the periods to which they relate.

In the simplest language, accrual basis means that assets recognized when they are receivable
rather than when physically received, and liabilities are recognized when they are payable rather
than when actually paid.

Accrual accounting means that income is recognized when earned regardless of when received
and expense is recognized when incurred regardless of when paid.

The essence of accrual accounting is the recognition of accounts receivable, accounts payable,
prepaid expenses, accrued expenses, deferred income, and accrued income.

Materiality and aggregation

An entity shall present separately each material class of similar items.

An entity shall present separately items of dissimilar nature or function unless they are
immaterial.
Financial statements result from processing large number of transactions or other events that are
aggregated into classes according to their nature or function.

The final stage in the process of aggregation and classification is the presentation of condensed
and classified data which form line items in financial statement.

For example, cash on hand, petty cash fund, cash in bank and cash equivalent shall be presented
as one item “cash and cash equivalents”.

Finished goods, goods in process, raw materials and manufacturing supplies are aggregated and
presented as one item “inventories”.

If a line item is not individually material, it is aggregated with other items either in those
statements or in the notes.

For example, an investor’s share in the net income of an associate is presented as a separate line
item in the income statement.

However, if this amount is not individually material, it may be aggregated with other income.

Materiality dictates that “an entity need not provide a specific disclosure required by PFRS if the
information is not material”.

When is an item material?

There is strict or uniform rule for determining whether an item is material or not.

Very often, this is dependent on good judgment, professional expertise and common sense.

However, a general guide may be given, to wit:

An item is material if knowledge of it would affect the decision of the informed users of the
financial statements.

Information is material if the omission or misstatement could influence the economic decision
that users make on the basis of the financial statements.

For example, small expenditures for tools are often expensed immediately rather than
depreciated over their useful life to save on clerical cost of recording depreciation.

In such a case, the effect of the financial statements is not large enough to affect economic
decision.

Another example is the common practice of large entities of rounding amounts to the nearest
thousand pesos in their financial statements.

Small entities may round off to the nearest peso.

Materiality is relativity

Materiality of an item depends on relative size rather than absolute size. What is material one
entity may be immaterial for another.

An error of P100, 000 in the financial statements of a multinational entity may not be important
but maybe so critical for a small entity.

Factors of materiality
In the exercise of judgment in determining materiality, the following factors may be considered:

a. Relative size of the item in relation to the total of the group to which item belong.

For example, the amount of advertising in relation to total distribution cost, the amount of office
salaries to total administrative expenses, the amount of prepaid expenses to total current assets
and the amount of leasehold improvement to total property, plant and equipment.

b. Nature of the item- An item may be inherently material because by its very nature it affects
economic decision.

For example, the discovery of a P20, 000 bribe is material event even for a very large entity.

Offsetting

Assets and liabilities, and income and expenses, when material, shall not be offset against each
other.

Offsetting may be done when it is required or permitted by another PFRS.

Examples of offsetting

Gains and losses in disposal of noncurrent assets are reported by deducting from the proceeds the
carrying amount of the assets and the related selling expenses.

Expenditure related to a provision and reimbursed under a contractual arrangement with a third
party may be netted against the related reimbursement.

In other words, the expenditure related to a provision and any reimbursement from a third party
can be offset, and only the net expenditure is presented as expense.

In addition, gains and losses arising from a group of similar transactions are reported on a net
basis.

For example, foreign exchange gains and losses or gains and losses arising from trading
securities are netted against the other.

However, if material, such gains and losses are reported separately.

The measurement of assets net of valuation allowance is permitted because technically this is not
offsetting.

Thus, accounts receivable may be shown net of allowance for doubtful accounts.

Frequency of reporting

An entity shall present a complete set of financial statements at least annually.

When an entity changes the end of reporting period and presents financial statements for a period
longer or shorter than 1 year, the entity shall disclose:

a. The period covered by the financial statements.

b. The reason for using a longer or shorter period.

c. The fact that amount presented in the financial statements are not entirely comparable.

Comparable information
Except when permitted or required otherwise by PFRS, an entity shall disclose comparative
information in respect of the previous period for all amount reported in the current period’s
financial statements.

In other words, the financial statements of the current period shall be presented with comparative
figures of the financial statements of the immediately preceding year.

Comparative information shall be included in narrative and descriptive information when it is

relevant to an understanding of the current period’s financial statements.

For example, details of a legal dispute, the outcome of which was uncertain at the end of the
preceding reporting period and is yet to be resolved, are disclosed in the current period.

Users shall benefit from information that an uncertainty existed at the end of the immediately
preceding reporting period, and steps have been taking during the current period to resolve the
uncertainty.

Third statement of financial position

A third statement of financial position is required when an entity:

a. Applies an accounting policy retrospectively.

b. Makes retrospective restatement of items in the financial statements.

c. Reclassifies items in the financial statements.

Under these circumstances, an entity shall present three statement of financial position as at:

1. The end of the current period

2. The end of the previous period

3. The beginning of the earliest comparative period

Consistency of presentation

Implicit in the presentation of comparable information is the principle of consistency.

The principle of consistency requires that “the accounting methods and practices shall be applied
on a uniform basis from period to period”.

The presentation and classification of financial statements items shall be uniform from one
accounting period to the next.

An entity cannot use the FIFO method of inventory valuation in one year, the average method in
the next year, another method in succeeding year and so on.

If the FIFO method is adopted in one year, such method is method is followed from year to year.

Consistency is desirable and essential to achieve comparability of financial statements.

However, consistency does not mean that no change in accounting method can be made.

If the change will result to information that is faithfully represented and more relevant to the
users of financial statements, then such change should be made.

But there should be full disclosure of the change and the peso effect of the change.
A change in the presentation and classification of items in the financial statements is allowed:

a. When it is required by another PFRS.

b. When a significant change in the nature of the operations of the entity will demonstrate a more
appropriate revised presentation and classification.

It is inappropriate for an entity to leave accounting policies unchanged when better and
acceptable alternatives exist.

Identification of financial statements

Financial statements shall be clearly identified and distinguished from other information in the
same published document.

Each component of the financial statements shall be clearly identified.

In addition, the following information shall be prominently displayed:

a. The name of the reporting entity.

b. Whether the financial statements cover the individual entity or a group of entities.

c. The end of the reporting period or the period covered by the financial statements or notes.

d. The presentation currency.

e. The level of rounding used in the amounts in the financial statements.

Financial statements are often made more understandable by presenting information in thousands
or millions units of the presentation currency.

This is acceptable as long as level of rounding in presentation is disclosed and relevant and
material information is not lost or omitted.

ELEMENTS OF FINANCIAL STATEMENT

The elements of financial statements are broad classes of events or transaction that are grouped
according to their economic characteristics.

The elements of financial statements are the “building blocks” from which financial statements
are constructed.

The elements directly related to the measurement of financial position are asset, liability and
equity.

The elements directly related to the measurement of financial performance are income and
expenses.

Definition of terms

Asset is defined as “a resource controlled by the entity as a result of past events and from which
future economic benefits are expected to flow to the entity”.

Liability is defined as “a present obligation of the entity arising from past events the settlement
of which is expected to result in an outflow from the entity of resources embodying economic
benefits”.
Equity is the “residual interest in the assets of the entity after deducting all of the liabilities”.

Income is “increase in economic benefit during the accounting period in the form of inflow or
increase in asset or decrease in liability that result in decrease of equity, other than distribution to
equity participants”.

Expense is “decrease in economic benefit during the accounting period in the form of an outflow
or decrease in asset or increase in liability that results in decrease in equity, other than
distribution to equity participants”.

Recognition of elements

Recognition is a term which means the process of reporting an asset, liability, income or expense
on the face of the financial statements of an entity.

In other words, recognition involves the inclusion of peso amount in the financial statements.

An item that meets the definition of an element shall be recognized if:

1. It is probable that any future economic benefit associated with the item will flow to or from
the entity.

2. The item has a cost or value that can be measured with reliability.

Asset recognition principle

An asset is recognized when it is probable that future economic benefits will flow to the entity
and the asset has a cost or value that can be measured reliably.

Thus, two conditions must be present for the recognition of an asset:

a. It is probable that future economic benefit will flow to the entity.

The term “probable” means that chance of the future economic benefit arising is more likely
rather than less likely.

b. The cost or value of the asset can be measured reliably.

Liability recognition principle

A liability is recognized when it is probable that an outflow of resources embodying economic

benefits will be required for a settlement of a present obligation and the amount of obligation can
be measured reliably.

Thus, two conditions must be present for the recognition of a liability:

a. It is probable that an outflow of economic benefits will be required for the settlement of a
present obligation.

b. The amount of obligation can be measured reliably.

Income recognition principle

The basic principle is that “income shall be recognized when earned”. But the question is when
is income considered to be earned?
The Conceptual Framework provides that “income is recognized when it is probable that an
increase in future economic benefits related to an increase in an asset or a decrease in a liability
has arisen and that the increase in economic benefits can be measured reliably”.

Thus, two conditions must be present for the recognition of income, namely:

a. It is probable that the future economic benefits will flow to the entity as a result of an increase
in an asset or a decrease in a liability.

b. The economic benefits can be measured reliably.

Undoubtedly, both conditions are present at the point of sale. Accordingly, the point of sale is the
point of income recognition.

The reason is that it is at the point of sale that the entity has transferred to the buyer the
significant risks and rewards of ownership of the goods.

Stated differently, legal title to the goods passes to the buyer at the point of sale which is the
point of delivery.

Legally, it is delivery that transfers ownership from the seller to the buyer.

Revenue from sale of goods

PAS 18, paragraph 14, provides the following conditions for the recognition of revenue from sale
of goods:

a. The entity has transferred to the buyer the significant risks and rewards of ownership of the
goods.

b. The entity retains neither continuing managerial involvement nor effective control over the
goods sold.

c. The amount of revenue can be measured reliably.

d. It is probable that economic benefits associated with the transaction will flow to the entity.

e. The cost incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from rendering services

PAS 18, paragraph 19, provides the following conditions for the recognition of revenue from
rendering of services:

a. The amount of revenue can be measured reliably.

b. It is probable that the economic benefits associated with the transaction will flow to the entity.

c. The stage of completion of the transaction at the end of the reporting period can be measured
reliably.

d. The cost incurred for the transaction and the cost to complete can be measured reliably.

Revenue from interest, royalties, and dividends

Interest revenue shall be recognized on a time proportion basis that takes into account the
effective yield on the asset.
Royalties shall be recognized on an accrual basis in accordance with the substance of the relevant
agreement.

Dividends shall be recognized as revenue when the shareholder’s right to receive payment is
established, meaning, when the dividends are declared.

Other income recognition

a. Installation fees are recognized as revenue over the period of installation by reference to the
stage of completion.

b. Subscription revenue should be recognized on a straight line basis over the subscription
period.

c. Admission fees are recognized as revenue when the event takes place.

d. Tuition fees are recognized as revenue over the period in which tuition is provided.

Expenses recognition principle

The basic expense recognition principle means that “expenses are recognized when incurred”.

But the question is when are expense incurred?

The Conceptual Framework provides that “expenses are recognized when it is probable that a
decrease in future economic benefit related to decrease in an asset or an increase in liability has
occurred and that the decrease in economic benefits can be measured reliably”.

Thus, two conditions must be present for the recognition of expenses:

a. It is probable that a decrease in future economic benefit has occurred as a result of a decrease
in an asset or an increase in a liability.

b. The decrease in economic benefit can be measured reliably.

Matching principle

Actually, the expense recognition principle is the application of the matching principle.

The generation of revenue is not without any cost. There has got to be some cost in earning an
income.

There is no gain if there is no pain.

The matching principle requires that “those costs and expenses incurred in earning a revenue
shall be reported in the same period”.

The matching principle has three applications, namely cause and effect association, systematic
and rational allocation, and immediate recognition.

Cause and effect association

Under this principle, the expense is recognized when the revenue is already recognized.

The reason is the presumed direct association of the expense with specific items of income.

The cause and effect association principle is actually the “strict matching concept”.
The process commonly referred to as the matching of costs with revenue, involves the
simultaneous or combined recognition of revenue and expenses that result directly and jointly
from the same transactions or other events.

The best example is the cost of merchandise inventory. Such cost is considered as an asset in the
meantime that the merchandise is on hand.

When the merchandise is sold, the cost thereof is expensed in the form of “cost of sale” because
at such time revenue may be recognized.

Other examples include doubtful accounts, warranty expense and sales commissions.

Systematic and rational allocation

Under this principle, some costs are expensed by simply allocating them over the periods
benefited.

When economic benefits are expected to arise over several accounting periods and the
association of income can only be broadly or indirectly determined, expense are recognized in
the basis of systematic and allocation procedures.

Concrete example include depreciation of property, plant and equipment, amortization of

intangibles, and allocation of prepaid rent, insurance, other prepayments and deferred charges.

Immediate recognition

Under this principle, the cost incurred is expensed outright because of uncertainty of future
economic benefits or difficulty of reliably associating certain costs with future revenue.

Actually, the principle reflects a conservative or prudent approach which is the general guide of
an accountant for dealing with uncertain situations.

An expense is recognized immediately:

a. When an expenditure produces no future economic benefits.

b. When future economic benefits do not qualify or cease to qualify for recognition as an asset in
the statement of financial position.

Examples include officer’s salaries and most administrative expenses, advertising and most
selling expenses, amount to settle lawsuit and worthless intangibles.

Many losses, such as loss from disposal of building, loss from sale of investments, and casualty
loss, are immediately recognized because they are not directly related to specific revenue.

Measurement of elements

Measurement is the process of determining the monetary amount at which the elements of
financial statements are recognized and carried in the statement of financial position and income
statement.

The measurement bases or financial attributes include:

a. Historical cost

b. Current cost
c. Realizable value

d. Present value

Definition of terms

Historical cost is the amount of cash or cash equivalent paid or the fair value of the
consideration given to acquire an asset at the time of acquisition.

Historical cost is also known as “past purchase exchange price”.

Historical cost is the measurement basis most commonly adopted by entities in preparing their
financial statements.

Current cost is the amount of cash or cash equivalent that would have to be paid if the same or
an equivalent asset was acquired currently.

Current cost is also known as “current sale exchange price”.

Realizable value is the amount of cash or cash equivalent that could currently be obtained by
selling the asset in an orderly disposal.

Realizable value is also known as “current sale exchange price” or “exit value”.

Present value is the discounted value of the future net cash inflows that the item is expected to
generate in the normal course of business.

Present value is also known as “future exchange price”.

Users of financial statements

Under the Conceptual Framework for Financial Reporting, the users of financial information
may be classified into two, namely primary users and other users.

The primary users include the existing and potential investors, lenders and other creditors.

The other users include the employees, customers, governments and their agencies, and the
public.

Primary users

The primary users of financial information are the parties to whom general purpose financial
reports are primarily directed.

Such users cannot require reporting entities to provide information directly to them and therefore
must rely on general purpose financial reports for much of the financial information they need.

The primary users and their information needs are:

1. Existing and potential investors

Existing and potential investors are concerned with the risk inherent in and return provided by
their investments.

The investors need information to help them determine whether they should buy, hold or sell.

Shareholders are also interested in information which enables them to assess the ability of the
entity to pay dividends.
2. Lenders and other creditors

Existing and potential lenders and other creditors are interested in information which enables
them to determine whether their loans, interest thereon and other amounts owing to them will be
paid when due.

Other users

By residual definition, “other users” are users of financial information other than the existing and
potential investors, lenders and other creditors.

The other users and their information needs are:

1. Employees

Employees are interested in information about the stability and profitability of the entity.

Specifically, the employees are interested in information which enables them to assess the ability
of the entity to provide remuneration, retirement benefits and employment opportunities.

2. Customers

Customers have an interest in information about the continuance of an entity especially when
they have a long term involvement with or are dependent on the entity.

3. Governments and their agencies

Governments and their agencies are interested in the allocation of resources and therefore the
activities of the entity.

These users require information to regulate the activities of the entity, determine taxation policies
and as a basis for national income and similar statistics.

4. Public

Entities affect members of the public in a variety of ways.

For example, entities make substantial contribution to the local economy in many ways including
the number of people they employ and their patronage of local suppliers.

Financial statements may assist the public by providing information about the trend and the
range of it activities.