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Financial Statements based on Philippine Accounting Standards (PAS) #1
Transcript of Financial Statements based on Philippine Accounting Standards (PAS) #1
1. SHARE CAPITAL
consists of the issuance of the company's own share as their par or stated value.
PAS made changes in the titles to mirror specific functions.
Statement of Financial Position
Statement of Comprehensive income
Statement f Change in Equity
Statement of Cash Flows
Notes to the Financial Statements
The FINANCIAL STATEMENT'S foremost objective is to provide information concerning the financial position, performance and cash flows of a company needed by various users in making sound economic decisions.
3. Investment transactions of owners and dividends paid to owners.
4. The beginning balance of each components in the statement of changes in equity and the movements onder them that brought about the ending balances.
Financial Statements Based on
Philippine Accounting Standards (PAS) #1
ASSETS & THEIR CLASSIFICATION
When the firm is expected to pay the liabilities within its normal operating cycle.
When the firm holds the liability primarily for the purpose of trading
When the liability can be paid within 12 months.
LIABILITIES AND THEIR CLASSIFICATION
AND ITS COMPONENTS
Changes in the Titles
Accomplished collection of Financial Statements:
In presenting the cash flow for the period, the movement of cash shall be categorized as cash flows from:
Cash Flows and its Classification
Formal reports providing financial information prepared by an accountant.
Statement of Financial Position
Assets are "resources CONTROLLED by the entity as a RESULT OF PAST TRANSACTIONS & EVENTS, from which FUTURE ECONOMIC BENEFITS are expected to flow in the entity".
1. When it is or cash equivalent.
2. When the company intends to hold the asset for the purpose of trading it.
3. When the comany expects the asset within 12 months
4. When the company expects to realize the asset or intends to sell or use it within the entity's normal operating cycle.
It takes the residual definition.
It means that if the asset does not fall under current asset then it must be non current.
Also takes residual definition.
Liabilities not classified as current are non-current.
consists of issuance of the company's own share above par/stated value or additional paid in capital or sometimes called premium on share capital.
3. RETAINED EARNINGS
consists of, among other things, the accumulated earnings of the company, prior period adjustment for errors, dividends declared/paid effect of changes in accounting policy and appropriated retained equity
INCOME STATEMENT AND ITS FORMS
Presents the result of the firms operations and performance for a given time.
Elements found in the statement consists of revenue and expenses.
in the provisions of PAS #1, it mentioned that a business shall present the income statement by using either the FUNCTIONAL APPROACH or NATURAL APPROACH.
The Functional Approach
Follows the function of expenses
The expenses are classified in accordance to their function namely: cost of sales, selling expenses, administrative expenses etc.
Typical income statement used by most companies .
The Natural Approach
Clustered according to their nature
ALL revenue items are clustered and totaled.
ALL expenses are clustered and totaled
The sum of the expenses are deducted from the sum of revenues to get the income before tax.
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
Present the company's financial position at a given period.
Consists of three elements:
Comprehensive income consists of recognized gains and losses that are NOT included in the income statement BUT are found at the statement of changes in equity.
The SCI can be presented separately or can be presented as an extension of the income statement.
When the comprehensive income is included in the income statement, the IC heading is no longer used .
Instead, the IC will be called Statement of Comprehensive Income.
STATEMENT OF CASH FLOW (Based on PAS 7)
The summary of the operating, investing and financing activities of the firm is presented here.
Reconciles the beginning and the ending balances of cash and cash equivalents in thr SFP.
The ending balance of cash flows is the same as cash balance presented in the balace sheet.
This statement shows the movements of cash for one whole period, generally one year
STATEMENT OF CHANGES IN EQUITY
The following are presented in the statement:
1. The total or net comprehensive income.
2. Effects brought about by the changes in accounting policies or correcting of errors.
Cash flows refer to the movement of cash.
Could either be inflow of cash which pertains to receipts of cash.
Or an outflow which means disbursement of cash.
A. OPERATING ACTIVITIES
These are activities related in the generation of the principal revenue of the firm
means the main source of revenue or income of the company
B. INVESTING ACTIVITIES
These are cash flows from purchasing or selling long term assets and other long term investments .
These are cash flows from sale or purchase transactions wherein non operating assets are involved.
C. FINANCING ACTIVITIES
These are the company' cash inflows or outflows involving its owners and creditors.
The borrowing included in this category are non-trade payables.
NOTES TO THE FINANCIAL STATEMENTS
These are bits or sets of information that cannot be disclosed on the face of the financial statements.
May either be quantitative or qualitative in nature and may have a bearing on .how the financial statements may be interpreted.
The notes may include the following:
A. CORPORATE/COMPANY INFORMATION
May include the nature of the business
the associate or subordinate of the company
principal activities of the company
B. BASIS OF PREPARING THE FINANCIAL STATEMENTS & THE STATEMENT OF COMPLIANCE
The basis in preparing the financial statements could be at historical cost or at fair value.
the preparation of the financial statements should be in compliance with the Philippine Financial Reporting Standard (PFRS)
C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The changes in accounting policies may be included here or placed in a segregate heading.
the breakdown of the line items in the financial statements is also included in the sub heading.
Statement of Financial Position
Statement of Comprehensive Income
Notes to the Financial
Statement of Change in
Excerpts from the Notes to Financial Statements (ADA Corporation)
The firm was incorporated under the laws of the Republic of the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on July 22, 1966. ADA is considered the largest oil refining and marketing company in the Philippines. It supplies more than 1/3 of the nation's fuel requirements.