Accounts

1) paragraph 7 of IAS 1(Revised) – Presentation of Financial Statements

Financial statement is presenting financial data of a company's operating performance, position and funds flow for an
accounting period. Financial statements alongside related information may be contained in various forms mainly for
external party use such as in the annual report. Financial statements provide information about an entity’s assets,
liabilities, equity, income and expenses, other changes in equity and cash flow.

In terms of paragraph 8 of IAS 1 (Revised) – Presentation of Financial Statements, a complete set of financial
statements would typically include:


(a) balance sheet; is a summary of financial balances of a business partnership, sole proprietorship or of a
company. A balance sheet can give you insight to the financial condition of business or company, assets,
liabilities and shareholder's equity, give investors a general idea as to what the company possess and owes,
and also the sum invested by the shareholders.
(b) income statement (or profit & loss account): indicating the profitability of the business over the preceding
year (or other time period)
(c) a statement showing changes in equity: indicating the total gains and losses generated by the enterprises
activities between two balance sheet dates
(d) cash flow statement; summarising the cash receipts and cash payments of the business over the same period
covered by the profit & loss account.
(e) accounting policies and explanatory notes: Accounting policies can vary depending on the company, often
need to be customized for a company.


2) In terms of paragraph 9 of the IASB Framework for the Preparation and Presentation of Financial
Statements, the users of financial statements include:-

1. Investors: The providers of risk capital and their advisers are concerned with the risk inherent in, and return
provided by, their investments. They need information to help them determine whether they should buy, hold
or sell. Shareholders are also interested in information which enables them to assess the ability of the entity to
pay dividends.
2. Employees: Employees and their representative groups are interested in information about the stability and
profitability of their employers. They are also interested in information which enables them to assess the
ability of the entity to provide information, retirement benefits, and employment opportunities.
3. Customers. Customers have an interest in information about the continuance of an entity, especially
when they have a long-term involvement with, or are dependent on, the entity.
4. Governments and their agencies. Governments and their agencies are interested in the allocation of
resources and, therefore, the activities of entities. They also require information in order to regulate
the activities of entities, determine taxation policies and as the basis for national income and similar
statistics.


3) IAS 7 Statement of Cash

The main purpose of a Cash Flow Statement (CFS) is to help the business owner plan and control the flow of income
in order to meet scheduled financial obligations. The information illustrated in the Cash Flow Statement also aids
lenders and investors in determining a company's financial health.

preparation of a statement of cash flows are as follows:
o operating activities are the main revenue-producing activities include cash received from customers and cash paid
to suppliers and employees
o investing activities are the acquisition and disposal of long-term assets and other investments
o financing activities are activities that alter the equity capital and borrowing structure


4) Statement of Changes in Equity

There are many different reasons that can cause a change in equity. Depreciation, profits, dividend payment, issues
with bonds, increases or decreases in inventory, plant or location improvements, and changes in the cash flow are all
examples of things that may cause a change in equity.

The final balances on the various items within the Statement of Changes in Equity will then appear in the Balance
Sheet under the heading EQUITY & LIABILITIES

5) Write Short notes on
1) Bank Reconciliation
This is a means in which a company or an individual's compare their bank accounts records to the bank's records that
is bank statement of the company or individuals and corresponding the amount indicated in the organization's own
accounting records at a particular period of time.

2) Income and expenditure statements
An income and expenditure account is a record showing the amounts of money coming in and going out of an
organization during a particular period of time. In British companies, it is usually called the profit and loss account,
while in US companies; it is called the income statement. This account is credited with all earnings (both realized and
unrealized) and debited with all expenses (both paid and unpaid).
3) Statements of changes equity
The statement of changes in owners' equity is a basic financial statement that includes the number of shares issued, the
date of their issuance and the dollar amounts received. It is important because it reconciles the beginning of the period
equity of an enterprise with its ending balance.
4) Trial Balance
A trial balance is a financial spreadsheet, or ledger that is used to create and calculate various financial reports from
the operation of a business. It contains figures that represent all accounts held by the company and their nominal
value. It will also list all of the credits and debits of the account. A trial balance can be compared to a checking,
savings or other bank account. A bookkeeper is the person who usually tracks the trial balance of a business by
entering all of the business's daily transactions into a ledger. Many financial software programs make it easy to create
and track a trial balance.
5) Auditing
Auditing refers to the assessment of financial records or accounts to check for their accuracy in a company or business
establishment.