Financial Statement
- Submitted by: Mayala
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- Category: Arts
- Date Submitted: 07/29/2011 08:27 AM
- Pages: 7
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OBJECTIVES OF FINANCIAL STATEMENT.
According to International financial reporting standard 1st July (2004)
The main objectives of financial statements are:
a) To provide information about the financial position, performance and cash flows of an entity that is useful to a wide range of users in decision making and evaluating decisions about the allocation of resources.
b) To provide information useful for decision making and to demonstrate accountability of the entity for the resources entrusted to it by:
Providing information about resources, allocation and uses of financial resources.
Providing information about how the entity financed its activities and meet its cash requirements.
Providing information that is useful in evaluating the entity’s ability to finance its activities and to meet its liabilities and commitments.
Providing information about the financial condition of the entity and changes in it.
Providing aggregate information useful in evaluating the entity’s performance in terms of service, efficiency and accomplishments.
CIMA Examination Kit (New edition Focused, Nov 1996 and 1997) page 239 explained that the objectives of financial reporting are to provide users with greater level of information about the results and resources of a group than is available from profit and loss account.
Thus is evidently that the objective of financial statement is about giving information about the organization’s financial position and operations which will provide the basis for decision making.
2.1.6 COMPONENTS OF FINANCIAL STATEMENT
According to IAS 1, a complete set of financial statement should contain the following:
Income Statement
It is referred as the Profit and Loss Account or Income statement in the case of trading enterprises, which is calculated to summarize the results of the operation of an enterprise during the accounting period. In the case of government, charity organizations, whose motive is to provide...
According to International financial reporting standard 1st July (2004)
The main objectives of financial statements are:
a) To provide information about the financial position, performance and cash flows of an entity that is useful to a wide range of users in decision making and evaluating decisions about the allocation of resources.
b) To provide information useful for decision making and to demonstrate accountability of the entity for the resources entrusted to it by:
Providing information about resources, allocation and uses of financial resources.
Providing information about how the entity financed its activities and meet its cash requirements.
Providing information that is useful in evaluating the entity’s ability to finance its activities and to meet its liabilities and commitments.
Providing information about the financial condition of the entity and changes in it.
Providing aggregate information useful in evaluating the entity’s performance in terms of service, efficiency and accomplishments.
CIMA Examination Kit (New edition Focused, Nov 1996 and 1997) page 239 explained that the objectives of financial reporting are to provide users with greater level of information about the results and resources of a group than is available from profit and loss account.
Thus is evidently that the objective of financial statement is about giving information about the organization’s financial position and operations which will provide the basis for decision making.
2.1.6 COMPONENTS OF FINANCIAL STATEMENT
According to IAS 1, a complete set of financial statement should contain the following:
Income Statement
It is referred as the Profit and Loss Account or Income statement in the case of trading enterprises, which is calculated to summarize the results of the operation of an enterprise during the accounting period. In the case of government, charity organizations, whose motive is to provide...