F&a
Contents
The major financial statements – an overview......................................................................................2
The statement of financial position.......................................................................................................3
Assets.............................................................................................................................................4
Claims............................................................................................................................................5
The effect of trading transactions......................................................................................................5
Classifying Assets...............................................................................................................................6
Classifying claims...............................................................................................................................6
Statement layouts..............................................................................................................................6
Capturing a moment in time..............................................................................................................7
The role of accounting conventions...................................................................................................7
Money measurement........................................................................................................................7
Valuing assets....................................................................................................................................8
Meeting user needs...........................................................................................................................8
, F&a
Finance and accounting
Chapter 15: Measuring and
reporting financial position
The major financial statements – an
overview
The major financial accounting statements aim to provide a picture of the financial position and
performance of a business. They ask the following three questions on a regular basis :
What cash movements took place?
How much wealth was generated?
What is the accumulated wealth of the business at the end of the period and what form
does it take?
To address each of these questions, there is a separate financial statement. These are :
The statement of cash flows, This shows the cash movements.
The income statement (also known as the profit and loss account), This shows the wealth
generated by trading and will be the difference between the value of the sales made and the
cost of the goods sold.
The statement of financial position (also know as the balance sheet), This shows the forms
of wealth held at the end of the day.
The three financial statements discussed are often referred to as the financial accounts of the
business. Together they provide an overall picture of the financial health of the business.
Contents
The major financial statements – an overview......................................................................................2
The statement of financial position.......................................................................................................3
Assets.............................................................................................................................................4
Claims............................................................................................................................................5
The effect of trading transactions......................................................................................................5
Classifying Assets...............................................................................................................................6
Classifying claims...............................................................................................................................6
Statement layouts..............................................................................................................................6
Capturing a moment in time..............................................................................................................7
The role of accounting conventions...................................................................................................7
Money measurement........................................................................................................................7
Valuing assets....................................................................................................................................8
Meeting user needs...........................................................................................................................8
, F&a
Finance and accounting
Chapter 15: Measuring and
reporting financial position
The major financial statements – an
overview
The major financial accounting statements aim to provide a picture of the financial position and
performance of a business. They ask the following three questions on a regular basis :
What cash movements took place?
How much wealth was generated?
What is the accumulated wealth of the business at the end of the period and what form
does it take?
To address each of these questions, there is a separate financial statement. These are :
The statement of cash flows, This shows the cash movements.
The income statement (also known as the profit and loss account), This shows the wealth
generated by trading and will be the difference between the value of the sales made and the
cost of the goods sold.
The statement of financial position (also know as the balance sheet), This shows the forms
of wealth held at the end of the day.
The three financial statements discussed are often referred to as the financial accounts of the
business. Together they provide an overall picture of the financial health of the business.
