Introduction to accounting Learning objectives ‘On completion ofthis chapter, you should be abet Sullobus reference Define financial reporting — recording, analysing and summor financial date. ing) Identify and define types of business entity - sole trader, partnership, (6) limited ability company. Explain the legal differences between o sole trader, portnershipanda All) limited ability company. Identify the advantages and disodventages of operating osascle ANG) trader, partnership oF limited liability compony, Define the nature, principles and scope of financial reporting Atle) Identify the users of financial statements and state ond differenti n2(0) ‘between their information needs. Describe the purpose of each of the financial statements: 1310) 1) Statement of financial position ') Statement of profit or loss and other comprehensive income li) Statement of changes in equity 1) Statoment of cash flows Identify ond define assets, abilities, equity, income and expenses. cs) Explain what is moant by governance specifically in the contoxt of the AB(a) preparation of finoncial statements. Describe the duties and responsibilities of directors in the preparation of —AB(b) the financial statements.1 Nature, principles and scope of financial reporting You may hove abroad understanding of what accountng ond financial reporting isl cbout, but {our ob oy be jot ce ore or toe of acccuring tf important to undertend tis brett of work wich on oveountant undertakes Financial reporting: Financial reporting is way of recording, enalysing and summarising transactions of a business, ‘The transactions are recorded and analysed in the aecounting records, The totals are then posted to the ledger accounts and finally the transactions are summarised in the financial statements Financial accounting Financial accounting is mainly « method of reporting the financial performance and financial position ofa business. tis not primarily concerned with providing information tewards the mere efficient running of the business. Although financial accounts are of interest to management, their principal function is to satisfy the information needs of persons not involved in running the business. They provide historical information. 1.2. Management accounting ‘The information needs of management go far beyond those of other account users. Managers have the responsibilty of planning and controling the resouress ofthe business. Therefore, they need much more detailed information. They also need to plan forthe future (eg budgets, which procict future revenue and expenditure). ‘Management (or cost) accounting: Management (or cost) accounting is o management information eystem which analyses data to provide information ae a basis for managerial ‘oction, The concern af a management aecountant is to present accounting information in the form most helpful to management. Its important that you understand the distinction between management accounting and financial accounting, 2 Financial statements The principal financial statements of a business ore the statement of profit or loss and the statement of financial position 2.4 Statement of profit or loss Statement of profit or loss: A statement of profit or loss s @ record of income generated and 8 | oxpenciture incurred over o given period. The statement shows whether the business has had ‘more revenue (ses) than expenditure (resulting ina profi) or vce versa (resulting in alos). Revenue: Revenui isthe income generated by the operations of a business for a period. Expenses: Expenses ore the costs of running the business for the same perlod. ‘The IASB": Conceptual Framework for Finaneial Reporting 2018 defines income ond expenses a follows: Income: income is increases in assets or decreases in liabilities that result in increases in ‘equity, other than those relating to contributions from holders of equity claims’ (Conceptual Framework for Financial Reporting 2018, para. 4.68),Expenses: ‘Expenses are decreases in assets or increases in Kabilities that result in decreasos in ‘equity, other than those relating to dstibutions to holders of equity eloims’ (Conceptual Framework for Financial Reporting 2018, para. 4.69) 2:11 Form of the statement of profit or loss The stotement of profit or loss which forms port of the published annua! financial statements of @ Tmited labilty company wil usually befor the perlad of © yeor, commencing from the dote of the previous year's statements. On the other hand, management might want to keep o closer eye on ‘company's profitability by making up quarterly er monthly statements, 24.2 Statement of profit or loss ~ sole trader s 8 Soles 200,000 Less: Cost of soles Opening inventories 40,000 Purchases 110.000 Carriage inwards 20,000 170,000 Closing inventories (60.000) Gross profit 80,000 Sundry income 5,000 Discounts receivable 188,000 Less: Expenses Rent 11,000 Corriege outwards 4,000 Telephone 1,000 Electricity 2,000 Carriage inwards 20,000 170,000 Closing inventories (90.000) (420,000) Gross profit 180,000 Sundry income 5,000 Discounts receivable 000, 188,000 Less: Expenses Rent 11,000 Corriage cutwords 4,000 Telephone 1,000 Electricity 2,0002.2 Statement of financial position ‘Statement of financial position: The statement of financial position is simply list ofall the Sm | ossets owned ond all the liciltis owed by @ business os ot « particular date. It fs @ snapshot of the financial postion of the business at a particular moment. Monetary ‘omounts are atteibuted to each of the assets ond liabilities Activity 1: Idea generation List out everything you own and awe, Solution 224 Assets [An asset is something valuable which a business owns or can use. The International Accounting ‘Standards Board (ASB) defines on asset in the Conceptual Framework for Financial Reporting 2018, as follows: ‘Asset: ‘An asset is a present economic resource controled by the entity os a result of past ‘events, An economic resource i @ right that has the potential to produce economie benefits! (Conceptual Framework for Financial Reporting 2018, poros. 43 and 44) Exomples of assets are foctories, office buildings, warehouses, delivery vans, lorries, plant and machinery, computer equipment, office furniture, cash and goods held in store awaiting sale to customers. ‘Some ossets ore held and used in operations foro long time. An office building is occupied by staff for yeors. Similarly, « machine has © productive life of many years before it weers out ‘Other assets ore held for only @ short time. The owner of @ newsagent shop, for example, hos to sell their daily newspapers on the some day thet they get them. The more quickly @ business can sel the goods t has in store, the more profit itis likely to moke; provided, of course, that the goods ‘resold at a highor price than what it cost the business to ccquire thom. 2.2.2 Liabilities A lobilty is something which is owed to somebody else. Liobltcs’ is the accounting term for the debts of « business. The IASB's Conceptual Framework for Financial Reporting 2018 defines & Tiabilty 0s fllows: obits’ ibility is a present obligation ofthe entity to transfer economic resource as a result of post events. An obligation isa duty of responsiblity thatthe entity has no proctical obilty te avoid” (Conceptual Framework for Financial Reporting 2018, paras. 4.26 and 4.29) Exomples of liabilities are omounts owed to @ supplier for goods bought on credit, amounts owed toa bank (or other lancer), q@ bank overdraft and amounts owed to tox authorities (ag in respect of sales tox). ‘Some labiities are due to be repaid fairly quickly (eg suppliers). Other lbilties may take some \yeors to repay (eg a bonk loan).( fp Aetivity 2: assets Which ofthe following is an asset cecording to the definition in the Caneeptul Framework? © Bonk overdraft © Foctory © Poyabies (© Amounts owed to tox authorities ildings Activity 3: Liabilities Which ofthe following is an example of alabilty? © Inventory © Receivables © Plant and machinery © Loan 2.2.3 Capital or equity ‘The omounts invested in a business by the owner are amounts that the business owes to the ‘emer. Ths is a special kind of lability, called capital. ina limited liaklty company, capital Lsuolly takes the form of shares. Share copita s also known as equity. The IAS's Conceptual Framowork for Financial Reporting 2018 defines equity a8 follows: up Equity: “Equity isthe residual interest in the assets ofthe entity ofter deducting alts labilties" (Conceptual Framework for Financial Reporting 2018, para. 4.63). 2.2.4 Statoment of financial position ~ sole trad 8 $ Assets Non-currant assets Land end buildings 100,000 Office equipment 0,000Motor vehicles 30,000 Furniture and fixtures 20,000 200,000 Current assets Inventories 50,000 “Trade receivables 30,000 Less: allowance for receivables 28,000 Prepoyments 5,000 Cosh in hand and ot bork __7000 90,000 Total assets 290,000 Copital and liabilities Copital 170,000 Profit 45,000 Less: drawings (25000) 190,000 Non-current liabilities Bank loans 40,000 Current lobilties Bank overdraft 16,000 Trade payables 40,000 Accruals 000 60,000 Total copital and fabiltios Key features of statement of financial position: + The heading is always, as at, o certain dote. + Non-current astets ~ assets held ond used in the business aver the long term (je more then one year). + Current assets ~ not non-current assets! Conventionally listed in increasing order of liquidity (e closoness of assots to cash). + Capital — what the business owes the propristor/owner. In this case, the sole trader owns all of the business, ie its total net worth: Copital = Assets — Liabilities = Net Assets. + Donot include a caption (item heading) if there is not a value for it.DY | PER atort (One of the competences you requite to fulfil Performance Objective 5 (POS) Leadership and ‘management of the PER isthe ability to manage time and tasks effectively to meet business needs ond professional commitments, and be capable of working under pressure. In the course of you FFA/FA studies, you willbe demonstrating this competence. 2.2.5. Relationship between the statement of financial position and the statement of profit, orloss ‘Statement of financial position shows the worth of business at a point in time. ‘Statement of profit or loss shows the trading activities over a period of time (financial performance). ‘The accounting period isthe period for which the statement of profit o loss was prepored. This is usually ¢ year Therefore, there will be a statement of financial position ct the beginning of the yecr (prior yeor lend) and ot the end of the accounting periad, ‘The statement of profit or loss is for the intervening peri. Statement of profit or loss forthe year ended 31.12.X7 TT Statement Statement of nancial of financial position position an12x6 antaxr 3 Users of financial information Finoneial information has to be useful toa wide range of users. 3 User Financial information has to be useful to @ wide range of users ‘'s of financial information (i tote: nt ancl nomen ‘What information would these users of financial information be Interested In? + Investors Employees + Lenders + Suppliers Customers “+ Government and their agencies Public Solution(& Activity 6: Managers \Wich ofthe felling sources of information would be most utful for monogers to use whan making decline for he yor cheod? (© Financil statements for the lst ancial yor (© Texrecords forthe post five yoors (© Budgets forthe coming financial year (© Bank statements forthe post yoor Exam focus point ‘The needs of users can be examined easily. For example, you could be given alist of types of Information ond asked which user group would be most interested in this information 4 Accounting records Inder tobe able to produce o statment of proftorlss endo statomentf fnancilposton, a Bunnats nocd to Lop orcerd fe te wonsactiona This proces is called bookkeeping Accounting records shouldbe compete, occurte ond vad theinformation produced so be ofa forthe users of franca fomation The mechoris of bookkeeping and te accounting ecerds o business shout keep wi be covered ‘Ghoptors Sond 6 5 Types of business entities 5.1 Three main types of busine: Businesses fal inte three main typos: + Sole trader —& sol trader isa business owned and tun by one indviduel, perhaps employing ‘one or two assistants ond contreling their work. The individuals business ond porsonal affairs (re, for legal and tax purposes, identical. + Partnership - Thase are orrangements between individuols to carry on business in common with a view to profit. A partnership, however, involves obligations to others, and so a partnership is usually governed by a partnership agreement. Unless its limited liability partnership (LLP), partners willbe fully liable for debts and liabilities, for example ifthe: partnership is sued.Baa (@ (e Activity 6: True or fals + Limited llabity company — Limited liablty status means that the business's debts and the: personal debts ofthe business's owners (shareholders) ore legally separate. The shareholders ‘cannot be sued for the debts of the business unless they have given some personal guorantes. ‘The sole trader isthe simplest of these forms. In low, sole traders and portnerships are not separate entities from thelr owners. However, & limited iabity compony is legally @ seporate entity from its owners. Contracts ean therefore be issued in the company’s name. For accounting purposes, ol three entities are treated as separate from thelr owners, This is called tho business entity concept. Limited liability companies Limited liability companies are formed under specific legislation (ag inthe UK, the Companies ket 2006). limited liability company is legally a separate entity from its owners, and can confer vorious rights and duties. Thera isa clear distinction between shareholders and directors of limited companies (©) Shareholders are the owners, but have limited rights as shareholders over the day-to-day running of the company. They provide capital and receive a return (dividend). (©) The board of directors are appointed to run the company on behalf of shareholders, In practice, they have « great deal of autonomy, Directors are often shareholders. ‘The reporting requirements for limited ability companies are much more stringent then fer sole ‘traders or partnerships. In the UK, theres a lage requirement for a company to: + Be registered at Companies House; Complete « Memorandum of Association ond Articles of Association to be deposited with the Registror of Companies: + Have at least one director (two for 0 public imited company (PLC)) who may also be a shareholder: Prepare financial accounts for submission to Companies House: Hove its financial accounts audited (lorger companies only); ond + Distibute the financial accounts te all shareholders. Essential reading Advantages and disadvantages of business types There are numerous advantages and disadvantages ofthe three business types. See Chapter 1 of Mari the following statements as true or flee. Shareholders receive ennual eccounts, prepared in accordance with legal and [ professional requirements. ‘The accounts of limited lablity companies are sometimes fled withthe Registrar of |] ‘Compares. Employees always recelve the company's accounts and an employse report. coq ‘The tox authoritias receive as much supplementary detail as they need to assess the [_] tax payable on profits. Banks frequently require more information than is supplied in the published coq ‘accounts when considering applications for loans and overcraftfociities.6 The concept of business entity (separate entity) Abusineasia considered te boo separa ety fremts comer and othe personal ransactiona of thecwner thou never be mated ath the busters wnecotora When considering a imited bitty company this stntion islet down inlaw — the company fate separate gal dey, In proparing accounts, any type of business is treated os being « separate entity from its cowneris). 7 Governance ‘Governance: Those charged with governonce of a company ore responsible for the preparation ofthe financial statements. Corporate governance isthe system by which companies and other entities are directed and controlled. Good corporate governance is important because the owners of © company and the people who manage the company are not always the some, which can lead to conflicts of interost. people who manage the company are nat always the same, which can lead to conflicts of interest Tha board of alrectors of company are usually the top management and are those who ore charged with governance of that company, The responsibilities and duties of directors are usually laid down in law and ore wide ranging. 7. Legal responsibilities of directors Directors have @ duty of care to show reasonable competence and may have to indemnify the company against loss caused by thelr negligence. Directors are olso said to be ina fiduciory position in relation to the company, which means that they must act honestly in what they ‘conic to be the best interest of the company and in good faith. In the UK, the Companies Act 2006 sets out sovan statutory duties of directors. Directors should: “het within their powers: + Promote the success of the company: + Exercise independant judgement; + Exercise reasonable skill, care and diligence: + Avoid conflicts of interest;+ Not accept benefits from third parties; ond + Declore interest in a proposed transaction or orrangement.” (Companies Act 2006, Sections 171-177) [An overriding theme of the Companies Act 2006 is the principle that the purpose of the legal framework surrounding companies should be to help companies do business. A director’s main ‘alm should be to create wealth for the shareholders. Inessence, this principle means that the law should encourage long-termism and regard for all stokeholders by directors and that stakeholder interests should be pursued in on enlightened and inclusive way. When exercising, this duty directors should consider: + The consequences of decisions in the long term + The interests of their employees + The need to develop good relationships with customers and suppliers * The impact of the company on the local community and the environment + The desirability of maintaining high standards of business conduct and o good reputation +The need to act fairly as betwaen all members of the company This list identities areas of porticular importance ond modem-doy expectations of responsible business behaviour, for example the interests ofthe company's employees and the impact of the ‘company’s operations on the community and the environment. 7.2. Responsibility for the financial statements Directors are responsible forthe preparation of the financial statements of the company, Secileay, directors ae repens for The preparation of the financial statements of the company in aecordence with the opplicable financial reporting framework (eg IFRSs) The internal controls necessary to enable the preparation of financial statements that are free ‘rom material misstatement, whethor due to error or fraud +The prevention and detection of fraud Itis the diectors' responsibilty to ensure thatthe entity complies withthe relevant lews and regulations. Directors should explain their responsibility for preparing accounts in the financial statements ‘They should also report that the business is @ going concern, with supporting assumptions and ‘qualifications as necessary,Directors should present o balanced and understandable assessment of the company's position tand prospects in the annual accounts and ether reports, such os interim reports and reports to regulators. The cirectors should so explain the bosis on which the compony generates or preserves value and the stratagy for delivering the company’s longer-term objectives. Companies over a certain size limit are subjected to on annual audit of thelr financial statements. An audit is on independent examination of the accounts to ensure thot they comply with legal requirements end accounting standards. Nate that the auditors are not responsible for preparing the financial statements. The findings of an audit ore reported to the shareholders of the ‘company. An audit gives the shareholders assurance that the accounts, which ore the responsibilty ofthe crectors, fairy present the finoneial performanea ond position af the ‘company. An aucit therefore goes some way in helping the shareholders ossess how well ‘monagement have carried out their responsibilty for stewardship of the companys assets, Exam focus point The ACCA examining team reported that questions on governance had been particularly poorly answered in the past. Make sure you reod this section carefully and be prepared to ‘answer questions on itn the exam, The regulatory framework Learning objectives ‘On competition of this chapter, you should be able to: Syllabus reference Explain the purpose of the regulatory system including the roles of the: 40) 1) IFRS Foundation i International Accounting Standards Board (ASB®) ii) IFRS Advisory Council 'v) IFRS Interpretations Committees (IFRIC®).. ¥) International Sustainability Standards Board (ISSB") Exploin the role of Internationcl Financial Reporting Standards (IFRS® —AU(b) Standards) in preparing financial statements.1 Introduction ‘The purpose ofthis section is to give a general pioture of some ofthe factors which have shaped financial accounting, We will concentrate on the accounts of limited fablity companies, as these ‘are the accounts most closely regulated by statute or otherwise. Financial statements ore produced by an entity's managers in order to show its owners how the ‘entity has performed over a period of time. ‘Company financial statements particularly need to show @ true and fair view. This meons a system of regulation is necessary to ensure thot financial statements ore produced 10 @ high stondord ond are comparable across different companies. 2 The Regulatory System 2.1 National/local legislation In most countries, limited lability companies are required by low to prepare ond publish accounts ‘annually. The form and content of the accounts is regulated primarily by national legislation, 2.2 Accounting concepts and individual judgement Meng figures in financial statements ore derived from the application of judgement in opelying fundamental accounting assumptions and conventions. This can lead to subjectivity Working from the same dato, different groups of people could produce very different finencial statements, IFthe exercise of judgement is completely unfettered, there will be no comparability between the accounts of different organisations. This willbe all the more significant in cases where deliberate monipulation occurs, in order to present accounts in the most favourable light 2.3 Accounting standards In an attempt to deol with some of the subjectivity, and to achieve comparability between different orgonisotions, aecounting standards were developed. These are developed at both national level (in most countries) and an international level. The FFA/FA syllabus fs concerned with International Financial Reporting Standards (FRSs), 2.4 International Financial Reporting Standards Foundation (IFRSF) ‘The IFRS Foundation isa not-for-profit, public interest organisation established to davelop a single sot of high-quality, understandable, enforceable ond globally accepted accounting standarde— IFRSs—and to promote and facilitate adoption of the standardsIts Trustees appoint members to the IASB, |FRIC and IFRS AC. They also oversee the regulctory system ond raise the finance necessary to support It has no involvement inthe standard setting process. “The objectives ofthe IFRS Foundation, taken from its document IFRS Foundation Constitution, 2018 are ©) To develop in the public interest a single sot of high quality, understandable, enforceable and lobally accepted financial reporting standards based upon clearly articulated principles. These standords should require high quality transparent and comparable information in financial statements and other financial reporting to help investors other participants inthe world’s capital markets and other usors of financial information make economic decisions. (©) To promote the use ond rigorous opplication of those stondards. (©) In futfiling the objectives associated with (a) and (b), to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings. (@ To promote and facilitate adoption of the IFRSs, being the standards and IFRIC interpretations issued by the Board, through the convergence of national accounting standards and IFRSs. ‘The IFRSF comprises of 22 trustees from diverse geographical and professional backgrounds. 2.5 International Accounting Standards Board (IASB) ‘The International Accounting Standards Board (IASB) i an independent, privately funded body whose principal oim is to develop o single set of high-quollty aecounting standards: International Financial Reporting Standards (FRSe). Italso loses with national accounting standard setters (for example, the UK's ASB) to achieve: convergence in accounting standards around the world. Prior to 200, standards wera issued os International Accounting Standards (IS). In 2003, IFRS 1 was issued and all new standards are now designated as |FRSs. Therefore, the term IFRS ‘encompass both IFRSs and IASs stil in Fores (eg IAS 7 Statement of Cash Flows). ‘The members ofthe IASB come from several countries and have a varicty of backgrounds, with & imix of cuditors, preparers of financial statements, users of financial statements and academics. ‘The IASB operates under the oversight of the IFRS Foundation. 2.6 IFRS Interpretations Committee (IFRIC) “The IFRS Interpretations Committe (FRIC) comprises 14 voting members, appointed by the trustees ofthe IFRS Foundation. The IFRIC issues guidance on both how to apply existing IFRSs in company financial statements ‘ond how to account for new financial reporting issues where no IFRSs exist. The members provide the best avilable technical expertise and diversity of international business and market experience relating to the application of IFRSs endit reports tothe IAS. The IFRIC has two moin responsible: + Toreview, on a timely basis, newly identified financol reporting issues not specticlly ‘edressed in nternotional Financial Reporting Standards: and + To clarify issues where unsatisfactory or conflicting intxpretations have developed, or seem likely to develop inthe absence of authoritative guidance, with a view to reaching consensus con the appropriate treatment.2.7 International Sustainability Standards Board (ISSB) In recent yeors investors have been calling for high quality, transparent eiable and comparable reporting by companies on elimate ond ather environmental, social and governance (ESC) To moot this demand, on Grd November 2021 the IFRS Foundation Tstees announced the creation of the Intemational Sustinebility Standards Boord (SSB) The objective ofthe 1SSB sto deliver comprehensive sustinabilty-reloted disclosure standards that provide investors with information about companies sustainabilty-reated risks and ‘opportunites to help them moke informed decisions 2,8 International Financial Reporting Standards Advisory Council (IFRS AC) The IFRS Advisory Council (FRS AC) (formerly called the Standards Advisory Council or SAC) is ‘essentially o forum used by the IASB to consult with the outside word, It consults with national standard setters, academies, user groups and « host of other interested parties to advise the IASB ‘on a range of issues, from the IASB's work programme for developing new IFRSs to giving practical ‘odhice on the implementation of particular standards. standard setters, academics, user groups and o host of other interested parties to advise the IASB ‘on a range of issues, from the IASB's work programme for developing new IFRSs to giving practical advice on the implementation of particular standards. The IFRS AC meets the IASB at least three times a year and puts forward the views of its members ‘on current standard-setting projects and advises the IASE on its agenda and timetable for developing IFRSs. Essential reading ‘There are currently 28 IASs ond 17 IFRSs. A ful list can be found in Chapter 2 of the Essential reading (you do not have to learn these). ‘The Essential reading is available as an Appendix ofthe digital edition of the Workbook. 2.9. Scope and application of IFRSs Scope Any limitation of the applicability of a specific IFRS is made cleor within that standard. IFRS are ‘ot Intended to be applied to immaterial items, nor are they retrospective. Each individual standard lays out its scope ot the beginning of the standard. Application \Within each individual country local regulations govern, to @ greater or lesser dagree, the issue of finenciol statements, These local regulations include accounting stondords issued by the national rogulctory bodies and/or professional accountancy bodies in the country concerned, Standard setting process The IASB prepares IFRS® Standards in accordance with due process. You do not need to know this for your exam, but the following diagram may be of interest. The procedure con be summarised os follows.1FRS Foundation Key enor Persie {ea see T+ Reporte - palin International Accounting ‘Standards Board tase) IFRS Intorprotations -| Committee (RIC) 3 The role of IFRSs IFRSs provide guidance os to how tronscctions and events should be: + Recognised when and where recorded? + Measured - what amount? + Presented ~ what heading? + Disclosed — what information should be shown in the notes to the accounts? + Disclosed - what information should be shown in the notes tothe accounts? ina setof financial statements For example: IS 2 Inventory states at what amount a company should values inventory ond ‘also requires thet the financial statements breakdown the inventory figure between its ‘components such as raw materials, work in progress and finished goods. Io company follows the relavant accounting standards, its finoncial statements should show a ‘rue and foie view. Activity 1: The role of the IFRSF ‘What isthe role ofthe Internetional Financial Reporting Standards Foundation? © Tocppoint the members ofthe IASB (© To advise the IASB on new accounting stondords they should consider issuing © To give guidance to businesses regarding how to opply cccounting standards in their financial stotements (© Toesue Intemational Financiol Reporting Standards ‘Activity 2: Convergence \Which of the following bodies is involved in trying to achieve convergence of global accounting standards? © Thelase © The FRIC (© The RSE (© The IFRS.AC (& Activity 3: Accounting standards Accounting standards or issued by: © Thelase (© The IFRS Foundation © The aasa,© ThelFRIc (e [Activity 4: The role of the IFRIC Which ofthe fellawing best describes the rale ofthe international Financial Reporting Standard Interpretetions Committee? (© Issues International Financial Reporting Standards (© Provides advice on the development of standards (© Interprets International Financial Reporting Standards ° Investigates listed companies to ensure they comply with Intemational Financial Reporting Standards (@ Activity 5: True or false Are the following statements in elation to IFRSs true or falee? “They must be applied to achieve far presentation in financial statements | ‘They are primarily designed for non-for-profit entities. Co “They ore designed to apply to general purpose financial statements. | “They set out recognition, measurement, presentation and disclosure co requirements for transactions and events.