Understanding

Financial Statement
Week 3
 Review of Previous Discussion
FUNCTIONS OF FINANCIAL FINANCIAL MANAGER’S
MANAGEMENT 3 4 RESPONSIBILITY

SIGNIFICANCE OF FINANCIAL FORMS OF BUSINESS

MANAGEMENT 2 5 ORGANIZATION

NATURE,SCOPE & GOALS OF OTHER KEY FUNCTION OF

FINANCIAL MANAGEMENT 1 START 6 FINANCIAL MANAGEMENT
Learning Objectives
01 General Objectives of Financial Statments

02 Demands for Financial Accounting Information

03 Sources of Information about Business Enterprise

04 Constraints on Relevant and Reliable Accounting Information

05 Financial Statements
General Objectives of Financial Statements

01 02 03 04
Providing Providing
Information Information Providing Providing
for about Information Information
Economic Financial about about
Decision Position Performanc Changes in
e of an Financial
Enterprise Positions
Demand for Financial Accounting Informationm

Managers & Investors and

Employees Analysts

Creditors and Shareholders &

Suppliers Directors

Regulatory and Customers and

Potential Strategic
Tax Agencies Partners
Sources of Information about Economic Enterprises

Audited Annual Financial Report

Unaudited Interim Financial Report

Constraints on Relevant and Reliable Information

Balance Between Balance Between

Timeliness Qualitative
Fair Presentation
Benefit and Cost
Characteristics
If there is undue delay The benefits derived Financial statements are
The aim is to achieve an frequently described as
in the reporting of from information appropriate balance
information, it may lose should exceed the cost showing a true and fair
among the characteristic view of financial position.
its relevance of providing it. in order to meet the
objective of financial
statements.
Written records that convey the business activities
and the financial performance of a company.

Are often audited by government agencies,

accountant, etc. to ensure accuracy for tax,
financing or investing purposes.

FINANCIAL
STATEMENTS
 Financial Statements
1 2 3 4 5
Statement of Statement of Statement of Statement of Cash Statement of
Financial Position Financial Changes in Equity Flows Comprehensive
Performance reports on a Income
company's cash involves those other
reports on the changes flow activities, comprehensive income
reports on a reports on a
in equity of the particularly its items which are not
company's assets, li company's income, exp
company over a stated operating, investing an included while
enses, and profits over
abilities, and owners period. d financing activities determining net
a stated period.
equity at a given over a stated period. income.
point in time.