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DipIFRS ACCA course - IAS1 Financial statements and the reporting entity No.8

DipIFRS ACCA course - IAS1 Financial statements and the reporting entity No.8


Objective and scope of financial statements:


The objective of financial statements is to provide information about the entity:


1. Assets: A resource that is controlled by the facility as a result of past events.
It is expected that future economic benefits are expected to flow from these assets.


2. Liabilities: An entity’s present obligation arising from past events.
It is expected that these liabilities will be settled through outflows of the entity's resources that include economic benefits.


3. Equity: The remaining share in the entity’s assets after deducting all of its liabilities.


4. Income: Increases in economic benefits during the accounting period in the form of:
1. inflows of assets.
2. Enhancements of assets.
3. A decrease in liabilities.
That leads to increases in equity other than those related to contributions from shareholders in equity.


5. Expenses: The decrease in economic benefits during the accounting period in the form of:
1. outflows of assets.
2. Depletions of assets.
3. Or incurrences of liabilities.
That leads to a decrease in equity other than those related to dividends to shareholders in equity.


Hence, it can be said that the financial statements are useful for their users in appraising ..
Prospects for the entity's future net cash flows
And in assessing management's oversight of the facility's resources.


The Reporting period:


Financial statements are prepared for a specified period of time and provide comparative information Under certain circumstances forward-looking information.


The Perspective adopted in the financial statements and the going concern assumption:
Financial statements provide information about transactions and other events that are viewed from the perspective of the entity preparing the report as a whole and are usually prepared on the assumption that the reporting entity is a going concern and will continue to operate for the foreseeable future.


note that the imposition of continuity is sometimes referred to as perpetual existence


The Reporting entity:


The reporting facility is an entity required to be ... or by choice ... Prepare the financial statements.
It can be a single facility, part of a facility, or it can include more than one facility.


The reporting facility is not necessarily a legal entity


Determining appropriate boundaries for the reporting entity is driven by the information needs of primary users of the reporting entity's financial statements.



Consolidated and unconsolidated financial statements:


In general, consolidated financial statements are more likely to provide useful information to users of financial statements than non-consolidated financial statements.



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