Grade 10 Financial Statement notes

Assets




Assets OE + L




BISSETT

, A financial statement is a document reporting business financial performance
and resources for a financial period.
Why do we need financial statements?

Financial statements help summarise all of a company’s financial information in one place.
The financial statements follow a set format to make sure that all company’s set out their
financial information in the same way.
Financial Statements can be used for Managerial Accounting (helps us make management
decisions) and financial Accounting (financial decisions).




Financial Statements need to have the following characteristics:
Comparability – users can compare one business to another and one year to another
Understandability – need to be understood by any user – not only by qualified accountants
Reliability – the information must be dependable and represent what it claims to and
should not be missing a material fact or consideration
Fairness – Information in the financial statements must be complete in all material respects
in order to present a true and fair view of the affairs of the company. Information should
not influence decision making to achieve a predetermined result.


BISSETT