Introduction to the Preparation and Presentation of Financial Statements
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Essay Preview: Introduction to the Preparation and Presentation of Financial Statements
CHAPTER 1
INTRODUCTION TO THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS
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1.1 | Outcomes for the chapter | 1 - 2 |
1.2 | Financial accounting 188 knowledge | 1 - 2 |
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1.3 | Objective of the conceptual framework | 1 - 3 |
1.4 | Scope of the framework | 1 - 3 |
1.5 | Underlying assumptions | 1 - 6 |
1.6 | Elements of financial statements | 1 - 6 |
1.7 | Recognition of elements of financial statements | 1 - 9 |
1.8 | Measuring the elements of financial statements | 1 - 10 |
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1.9 | Introduction | 1 - 12 |
1.10 | General requirements in terms of the Companies Act of 2008 | 1 - 12 |
1.11 | Faithful representation of company financial statements | 1 - 12 |
1.12 | Complete set of financial statements | 1 - 13 |
1.13 | General features of financial statements | 1 - 13 |
1.14 | Structure and content of financial statements | 1 - 16 |
1.15 | Schematic representation | 1 - 37 |
1.16 | Income tax of companies | 1 - 38 |
CHAPTER 1
INTRODUCTION TO THE PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS
1.1 THE OUTCOMES FOR THE CHAPTER ARE TO:
1.1.1 understand the conceptual framework.
1.1.2 identify and define the elements of financial statements.
1.1.3 apply the recognition and measurement principles of the elements of
financial statements.
1.1.4 distinguish between the components of financial statements.
- understand and be able to discuss the overall considerations for the compilation of financial statements.
- understand and be able to apply the structure and contents of financial statements to a given set of facts.
1.2 FINANCIAL ACCOUNTING 188 KNOWLEDGE
The following topics have been discussed in Financial Accounting 188 and you should be able to:
- understand the conceptual framework
- identify and define the elements of financial statements
- apply the recognition and measurement principles of the elements of
financial statements
- prepare company financial statements to comply with the minimum requirements of International Financial Reporting Standards and the companies act.
- CONCEPTUAL FRAMEWORK
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1.3 OBJECTIVE OF THE CONCEPTUAL FRAMEWORK
The objective of the conceptual framework (hereafter referred to as the framework) is to lessen the different circumstances that lead to the use of various definitions and recognition criteria which are used for the preparation of financial statements. At the same time the use of financial statements for decision making will be enhanced.
- SCOPE OF THE FRAMEWORK
1.4.1 Objective of general purpose financial reporting
The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors (primary users) in making decisions about providing resources to the entity.
General purpose financial statements cannot provide all the information that is needed by users. Users also have to consider general economic conditions, political events and the industry in which the entity operates in their decision making process. The financial statements are not directed at regulators, management of the entity and the general public, but they can still use it.
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