Financial statement presentation is carried out for various purposes. The ease with, which a financial statement is understood depends on financial statement presentation. The financial statements follow a particular format in their presentation.
Financial Statement Presentation & Contents:
Financial statement presentation can be carried out under the following subheads:
Objectives: to highlight differences between current fiscal position with that of the company’s past financial performance.
Scope: provides summary of the financial condition of a company for the use of different categories of users.
Purpose of financial statements: represents the financial condition of a company. Purpose of the financial statement is to offer details on company assets, liabilities, revenues, sales, expenses, flow of cash, accounts payable, accounts receivables.
Components of financial statements: include a balance sheet, income statements, cash flow statements, statements of retained earnings and notes.
Definition: include few terms, which are used in a financial statement. They are material, practicable, notes, financial reporting standards and other associated terms.
Accrual basis of presentation: Excluding the cash flow statement, the other types of financial statements are to be prepared as per accrual basis of presentation.
Consistency of presentation: the flow of information should be from one period to another in most of the cases. It should be done in a systematic and orderly manner.
Identification of financial statements: financial statements should be clear and distinguished from other parts of the documents.
Comparative information: is provided only, when it is needed under certain circumstances. Comparative information is also provided if the current situation is required to be compared with the previous records with regard to particular factors.
Reporting period: the financial statements are required to be furnished at least once in a year. In the event, when financial statements are made earlier or later, the same has to be informed.
Financial Statement Presentation & Other Elements:
The financial statement presentation also includes the following:
Income statements: implies profit earned and the loss incurred by a company. The income statements are available in two categories. They are single step income statements and multi step income statements. Depending on the transaction and its nature, the type of income statement is made use of.
Statements of cash flow: implies cash flux. Money , which is coming into the company and the money , which is leaving the company are accounted for.
Balance Sheet: indicates the liabilities, assets and net worth of a company. The assets of a company are referred to as the total sum of liabilities and net worth.
Statements of retained earnings: provides information about equities and details of ownership(of equities).
Last Updated on : 26th June 2013