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Advanced Accounting Theory & Practice

By providing the basic structure for each type of financial statements, the standard has become highly essential for lenders, investors, shareholders and regulatory authorities. For that objective, the standard has classified different economic units as assets, equity, liabilities, income, expenses and cash flows. This classification is used to prepare and present different types of financial statements such as statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows. The IAS 1 provides different qualitative characteristics which are highly essential to be depicted by the financial statements. Fair presentation suggests that the financial statements faithfully represent the effects of the economic transactions and conditions which must be complying with the framework definition, recognition and measurement criteria for assets, equities, liabilities, income and expense as well. In the following parts of this paper, first key features of IAS 1 along with different types of financial statements have been accounted for. Subsequent to that, a description elaborating qualitative characteristics has also been included....
This definition covers both consolidated and separate financial statements. Interestingly, IAS 1 does not specifically apply to the structure, content and form of interim financial statements, which are detailed in IAS 34 Interim Financial Reporting, but many of its basic underpinnings such as consistency and the need for fair presentation do apply to the interim financial statements. Types of financial statements There are five types of financial statements.2The Paragraph 10 of the IAS 1 prescribes the types of financial statements to be termed as financial statements and they are: (a) A statement of financial position as at the end of the period (b) A statement of comprehensive income for the period (c) A statement of changes in equity for the period (d) A statement of cash flow as at the end of the period (e) Notes comprising a summary of supplementary explanatory financial or non financial information and other significant accounting policies Purpose of financial statements IAS 1 details the objective of general-purpose financial statements. As a structured representation of the financial performance and the financial position of an entity, the financial statements provide information about the financial performance, the financial position and the cash flows information of an entity.3 This type of information is useful for a wide range of internal and external users who take into account such financial information with an aim of making economic decisions. In addition to that, financial statements also provide the results of the management’s stewardship of the resources extended by the shareholders of an entity. The following classification has ...Show more

Summary

International Accounting Standard (IAS) 1 provides a framework for the Preparation and Presentation of Financial Statements.This accounting standard is comprised of information necessary for preparing and presenting the financial statements…
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