Financial Statement Presentation

Required
Financial Statements
 Statement of Financial Position
 Statement of Comprehensive Income
 Statement of changes in equity
 Cash flow statement
 Notes and supplementary
schedules
2
 Identification of
Financial Statements

– Financial statements (and their

components) must be clearly
identified and distinguished from
other information in the annual
report

3
 Identification of
Financial Statements
– Required disclosure:
• name of enterprise
• Name of financial statements or
consolidated financial statements
• the balance sheet date, or period
of reporting
• presentation currency
• level of rounding of figures 4
Assets are resources received
which have future benefit.
Typical assets for a business include:
 Cash  Prepaid
insurance
 Accounts
receivable  Office building
 Office  Office
supplies equipment
Cash
- A current asset
 coins
 currency
 checking accounts
Accounts receivable
- A current asset
- are promises received from
customers to pay for goods
and services later.
Credit.
Cash or I’ll pay you later.
Credit?
Office supplies
- a current asset

 paper
 pens
 floppy disks, etc
Prepaid insurance
- a current asset
- is an asset because it has
future benefit.
- Insurance benefits expire
with the passage of time.
Building
- A non-current asset
-is the structure where the room for
guests, dining, bar, kitchen, offices,
etc. are found.
-an asset with future benefit
because it will be used in the future.
- shown at net book value in the
balance sheet
Office Furniture

- A non-current asset used to

support

 desks
 chair
Cabinets
Machinery and Equipment
-A non-current asset
-Used in operations
-Not intended for sale
 copiers
 computers
 fax machines
 refrigerators and freezers
 telephone
 laundry equipment
Automobile
Guitar
China, Glass, Silver, Linen, Uniform
-Used in operations
-Not intended for sale
 Amortized due to decline in
value as a result of
Loss
Breakage
Wear and tear
 ! Assets have future benefit.
Does it have future benefit?
 Cash it can be spent
 Accounts future collections
receivable
 Office supplies use of supplies
in the future
Liabilities are obligations or
promises given to others.

Typical liabilities for a business

include:
 Accounts payable
 Notes payable
 Mortgage payable
 Liabilities
Current liabilities
- Debts payable within a year

 Accounts payable
 Notes payable
 Accrued Expenses
 Unearned income
Accounts payable are
obligations or promises to pay
later for goods and services that
the company has purchased on
credit.
Notes payable are written
promises (promissory notes) to
repay a debt.
Accrued Expenses
Expenses already incurred but
not yet paid.
Unearned Income
Deposits on room reservations
and banquet bookings.
Also include accounts of
customers with credit balances.
Current Portion of Long-term
Liabilities
Portion of long-term liabilities
due within one year.
Dividends Payable
Portion of accumulated
profit/earnings available for
distribution to stockholders.
 NON-CURRENT LIABILITIES
• Indebtedness which are payable
or to be settled over one year.
• Examples:
– Loans Payable
– Mortgage Payable
– Bonds Payable
A mortgage payable results when a
company borrows money from a
bank to buy real estate. The bank
will take a mortgage on the real
estate which means the bank can
foreclose and seize the property
should the borrower be unable to
make the mortgage payments.
Note: Liability accounts often include
! “payable” in the account title.
Owner’s withdrawal
Sometimes called a
distribution, is a payment of
cash or assets to its owners. In
other words, an owner's
withdrawal is when an owner
takes money out of the
company for personal use.
Owner’s Capital
the claims by owners of on
the resources of the
organization.