The objective of financial statements is to provide financial information about the reporting entity’s assets, liabilities, equity, income and expenses that is useful to users of financial statements in assessing the prospects for future net cash inflows to the reporting entity and in assessing management’s stewardship of the entity’s economic resources.
A content page of IFRS Financial Statement may look similar to the following content listing: What are IFRS Financial Statements?
Statement of Financial Position: This is also known as the balance sheet. IFRS prescribes the ways in which the components of a balance sheet are reported. This statement recognises assets, liabilities and equity. This comprises information about a reporting entity’s economic resources, claims against the entity and changes in resources and claims that result from other events and transactions such as issuing debt and equity instruments.
Statement of Comprehensive Income: This can take the form of one statement, or it can be separated into a statement of income (recognising income and expense realised based on the accrual accounting concept) and a statement of other income (recognising revenues, expenses, gains and losses that are excluded from the statement of income, because they were not yet realised). This comprises information on the changes in economic resources and claims that result from the entity’s financial performance.
Statement of Changes in Equity: In the past also known as a statement of retained earnings, this documents the company’s change in earnings or profit and contributions from holders of equity claims and distributions to them for the given financial period.
Statement of Cash Flow: This report summarizes the company’s financial transactions in the given period as cash flows (changes in cash and cash equivalents) categorised into Operating activities, Investing activities, and Financing activities. What are IFRS Financial Statements?
In addition to these main statements, a company must also give a summary of its accounting policies (representing the methods, assumptions and judgments used in estimating the amounts presented and disclosed, and changes in those methods, assumptions and judgments), movement schedules of certain reporting lines in the balance sheet, breakdowns of more details of other reporting lines in the income statement or statement of cash flows. The full report is seen side by side with the previous report, to provide a starting point for users to compare the different statements from year-to-year.
Accrual accounting What are IFRS Financial Statements?
Accrual accounting depicts the effects of transactions and other events and circumstances on a reporting entity’s economic resources and claims in the periods in which those effects occur, even if the resulting cash receipts and payments occur in a different period.
This is important because information about a reporting entity’s economic resources and claims and changes in its economic resources and claims during a period provides a better basis for assessing the entity’s past and future performance than information solely about cash receipts and payments during that period.