Which of the following is comprised in a complete set of financial statements?
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A complete set of financial statements for large and medium-sized companies for the reporting period comprise: •a statement of financial position at the reporting date; •either: –a single
statement of comprehensive income showing a subtotal of items recognised in determining profit or loss followed by other items of comprehensive income; or –a separate income statement and statement of other comprehensive income (which begins with profit or loss for the period followed by other items of
comprehensive income); •a statement of changes in equity; •a statement of cash flows; and Need help? Get subscribed!To subscribe to this content, simply call 0800 231 5199 We can create a package that’s catered to your individual needs. Or book a demo to see this product in action. Talk to us on live chat Call an Expert: 0800 231 5199 Full LibraryHMRC ArchiveRed and Green ArchiveNews Archive Read time: 4 mins Read the highlightsFinancial statements are a useful tool in analyzing your company’s financial position and performance. They are comprised of four main components, of which the balance sheet and the income statement are essential. The first item to consider when looking at a set of financial statements is whether these are external financial statements or internal financial statements. External financial statementsExternal financial statements are issued for external reporting purposes. They are for investors, tax authorities or other significant partners who require financial information. External financial statements are normally produced on an annual basis, although in some cases (including for public companies) they are produced quarterly. To ensure comparability and consistency, external financial statements are usually based on Generally Accepted Accounting Principles (GAAP), which has specific requirements that must be followed. Internal financial statementsInternal financial statements are more flexible than external financial statements and have a higher analytical component. They may report by division, have more detail or be produced on a more frequent basis (weekly, monthly or quarterly). A set of financial statements includes two essential statements: The balance sheet and the income statementA set of financial statements is comprised of several statements, some of which are optional. If the statements are prepared or reported by an external accountant, they will begin with a report from the accountant. This will be followed by the two essential financial statements:
The balance sheet and the income statement are usually followed by the cash flow statement and notes to the financial statements. Generally, external financial statements are prepared on the accrual basis of accounting, which means that assets and liabilities are recorded when they are committed to, and revenue and expenses are recorded when they are incurred (rather than when they are actually paid). The balance sheet is the critical “what do we have” statement. The balance sheet shows what the company owns (assets such as cash, accounts receivable and equipment) and what the company owes (liabilities such as accounts payable and loans). Any remaining difference between these two amounts (the assets and the liabilities) shows what belongs to the owners as their equity interest. These three amounts should always be in balance (see the fundamental accounting equation). The balance sheet presents a picture of where the company is at a certain point in time. Income statement (profit and loss statement)The income statement is the “what did we do” statement. The income statement, or profit and loss statement, shows how the company performed during the course of its operations for a fixed period of time. It accumulates information over a set period (typically annually, monthly or quarterly). Key elements of the income statement include revenue and expenses. Combined, these numbers yield the net income (or loss). Statement of retained earningsThe statement of retained earnings is a measure of the assets of your operation that have been generated through profitable activity, retained in your business and not paid out to shareholders as dividends. Generally, a large amount of retained earnings is regarded as a sign that the company has done well and is reinvesting its profits in itself. That said, a startup or early-stage business often faces reporting negative retained earnings as it takes time to build a business and become profitable. Cash flow statementThe cash flow statement shows the sources and uses of cash for a fixed period of time. The cash flow statement informs investors and creditors about the solvency of your business, where the business is receiving its cash from, and on what it is spending its cash. Accountant’s reportWhen an external accountant prepares or reports on the financial statements, an accountant’s report will need to be included with the financial statements. This report tells you how much scrutiny has been applied to the financial statements and if they deviate from GAAP in any way. Notes to the financial statementsIn Canada, businesses can select the accounting standard on which to base their financial statements. The notes to the financial statements tell readers what policy choices have been made, as well as other information that can be vital to a complete understanding of the financial statements. Summary: Financial statements have four main components (the balance sheet and income statement are essential) and help you analyze your company’s financial position and performance.Read next: Reading a financial statement: The balance sheet (assets, liabilities and equity)What are 4 components of financial statements?They show you where a company's money came from, where it went, and where it is now. There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity.
What are the 6 components of a complete set of financial statements?The components of Financial Statements are the building blocks that together form the Financial Statements and help understand the business's financial health. And consists of an Income Statement, Balance Sheet, Cash Flow Statement, and Shareholders' Equity Statement.. Assets.. Liabilities.. Owners Equity.. What are the 5 components of financial statement?Financial statements are used to provide financial information and determine the profitability of a company. To best understand financial statements, it's important to understand the five elements of financial statements. Which are, assets, liabilities, equity, revenues and expenses.
Which of the following is included in a complete set of financial statements quizlet?A complete set of financial statements prepared in accordance with IFRS includes (1) a statement of financial position, (2) a single statement of comprehensive income (or two statements: a separate income statement and a statement of comprehensive income that begins with profit or loss and displays the components of ...
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