Australian Financial Statement

The main purpose of the financial statements is to provide creditors and investors with a summary of a business financial activity. All statements are prepared at certain times throughout the year. The balance sheet reports liabilities, assets, and owner equity of the company. The income statement matches incurred expenses during a period of generated revenue. The statement of retained earnings reports retained earnings from net loss and net incomes from

It define the scope of judgment in planning financial statements by formulate the characteristic, activity and restrict of financial accounting and reporting. It also increases different of financial statements by reduce the number of other accounting methods. If standards were come from a reasonable style of concepts. Likewise, reporting requirement will be more constant and fair because they will record accounting base on former set of concepts. Moreover, the setting requirement will be more economical because problem should not be discuss from different position. In additional, it help to reduce accounting common error and political

According to the research, Accounting standards exist to facilitate the preparation of high-quality and consistent general purpose financial statements to convey the useful information about the general financial condition and results related to reporting entities, such as companies, non-profit corporations and governments. And Australia adopted International Financial Reporting Standards (IFRS) in 2005, as directed by the Financial Reporting Council in its 2002 directive to the AASB. The Australian Accounting Standards Board has published AASB 15 Revenue from Contracts and Customers, the Australian equivalent of its international namesake, IFRS 15. And the purpose of the new Standards is to provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue.

It is important for every business to carry out financial statement analysis in order to gain an understanding of their current financial status. There are two main types of financial statements that businesses commonly use when it comes to financial analysis. These are known as the Profit and Loss Account and the Statement of Financial Position. A profit and loss account consists of a list of expenses incurred by the company, against their revenues over a certain period of time. It shows whether the organisation

Using positive approach for describing and predicting accounting practice, and consequently, developing the accounting theory, has led to sufficient support for accounting information. In fact most of empirical accounting research has shown that accounting numbers and figures can lead to changes in the capital market features. This creates a lot of sensitivity towards accounting information. In most countries, the funds necessary for the activities of the financial accounting standard board are provided by the representatives in the parliament. If accounting standards endanger the wealth of these representatives, the budget of the board will be limited and consequently the wealth of the members of the board will be at risk. Accordingly, accounting enters a realm of

Financial statement is to provide information in relation to the financial performance financial position, and cash flow of an entity that is useful for management or users to making economic decisions. Under FRS101”Presentation of Financial Statements” provide a clear guidance that in order to improve the standard of financial reporting, an entity should concern about the analysis for the nature expenses. Paragraph 29 of FRS101 requires that an entity shall present separately each each material class of similar items and present separately items of dissimilar nature unless they immaterial. The entity shall disclose their nature and amount separately as required by Paragraph 97 of FRS101 if found any material items of income and expenses . The entity shall make a classification based on their nature or function within the entity. Besides, the entity should choose a method which will provide information that is reliable and relevant to the activities and operations of the

Firm owners as well as managers keep track of the company’s financial performance by maintaining at least four major financial statements. The major financial statements include Income statement, Balance sheet, stockholder’s equity statement, & cash flows statement. Each financial statement provides different type of activity of the company 's financial status in the particular period. Financial statements are usually prepared based on the company’s need it could be monthly, quarterly, semiannually and annually.

The financial statement is a financial document used to indicate the financial position of a business at a particular moment in time. A business’s financial position can be analysed into three main areas: Profitability, liquidity and stewardships. The statement is prepared at the end of each financial year using accounting basis. The Accrual accounting basis is one of them, it is perhaps the most commonly used approach to keep up with revenues and expenses in the preparation of financial statement . It is suitable to use by organisations that have business activities involving

4.3.4 Profit and Loss Account (Income Statement). Income statement is considered as a very significant statement, with more attention to the firm’s earning capacity as a measure of its financial strength. The earning capacity and potential of a firm is reflected by its income statement. The generally accepted convention is to show one year’s events in income statement. Since the income statement reflects the results of operations for a period of time, it is a flow statement. The income statement presents the summery of revenues, expenses and net income of a firm. It serves as a measure of the firm’s profitability. Revenues are amounts which the customers pay to the firm for providing them goods and services. The firm uses economic resources in providing goods CDCE Page 2

Many parts play a role in a firm’s financial statement and making sure everything is correct. There are many people that take part in keeping the firm’s financial statements in order and information correct on them. From the managers in the firm to the owners and lenders there is a hand in the finances. Some of these things are the income statement, balance sheet, and statement of cash flows. All three play a valuable role in a firm’s financial statement. Income statement shows the expenses incurred and revenues generated by the firm over an accounting period. Some major types of expenses that are shown on a typical income statement are revenue, cost of goods sold, gross profit, operating income, income before taxes, earnings per share, and net income. The

Accounting standards offers standard ways of recognising, measuring and presenting financial transactions. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years.

The financial statements consists of balance sheet, profit and loss statements, accumulated profit and loss,

The elements of financial statements are statement of financial performance or income statement, statement of financial position or balance sheet, statement of cash flows, statement of stockholders equity and notes. Statement of financial performance gives information about the financial health or profitability of companies during a particular period of time. For example, the company is profitable if its sales revenue exceeds its business expenses, and users of financial statements such as investors, creditors, banks and government agencies may use the information in the income statement to make economic decision. Moreover, the company is operating unprofitably if its expenses exceed its sales revenue during a particularly

It is better for accounting profession having agreed accounting standards as a basis for preparing financial statements. This is

Accounting standards have up to 35 sections applicable to the UK and Ireland. These sections, each address a specific area of accounting. The consolidated financial statements of listed groups are required by the IAS regulation to be prepared under EU-adopted IFRSs. However, qualitative characteristic are also important in the context of the choice and change of accounting policies by firms, there are various qualitative characteristics of useful financial information and they are Relevance Materiality, Faithful representation, Comparability, Verifiability, Understandability, and Timeliness. Although they are all important for financial information they are a few that must be considered very important. There are different users of this framework and they have different reasons as to why they need information from the financial statement.