Bridging Accounting Assignment

2562 Words11 Pages
a) Describe the general purpose of the statement of comprehensive income. In addition, explain the terms income and expenses as defined by the Conceptual Framework for Financial Reporting.
According to the International Financial Reporting Standards (IFRS), an entity shall present its total comprehensive income for an accounting period either in a single statement or two statements where all items of income and expenses recognized in that particular accounting period are presented however for two statements, except those that are recognized in total comprehensive income outside of profit or loss as permitted or required by IFRS.
The comprehensive income is a statement inclusive of all income and expenses including revenue, profit and
…show more content…
Losses include those resulting from natural disasters and disposal of non-current assets. Losses by definition also include unrealized losses like effects of increases in the exchange rate for a foreign currency from borrowings so when losses are recognized in the income statements, they would usually be displayed distinctly as knowledge of them is useful for purpose of making economic decisions and are often reported net of related income.

b) Describe the general purpose of the statement of financial position. In addition, explain the terms asset, liability and equity as defined by the Conceptual Framework for Financial Reporting.
The financial position is a statement also known as balance sheet, presents the financial position of an entity at a given date – i.e. as at 31st December 2013. It consists of three main components; assets, liabilities and equity. The statement of financial position facilitates users in assessing the financial soundness of an entity in terms of liquidity risk, financial risk, credit risk and business risk. When used in conjunction with other financial statements of the entity and its competitors, balance sheet may help to identify relationships and trends which are indicative of potential problems or areas for further improvements. Analysis of the statement of financial position could
Get Access