FINANCIAL STATEMENTS

Based on Philippine Accounting Standards (PAS) #1

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STATEMENT OF FINANCIAL
POSITION (SFP)
This financial statement presents the company’s financial position
at a given period. It consists of the three elements making up the
financial position – assets, liability, and equity.

ASSETS and their CLASSIFICATION

ASSETS
Are the “resources controlled by the entity as a result of past t
ransactions and event from which future economic benefits to flo
w in the entity.”
Classifies assets as current and non-current.
Current Assets
When it is cash or cash equivalent.
When the company intends to hold the asset for the
purpose of trading it.
When the company expects to realize the asset or intends
to sell or use it within the entity’s normal operating cycle.
PRESENTATION OF CURRENT ASSETS
Current assets are usually listed in the order of liquidity. PAS 1, paragraph 54, pr
ovides that as minimum, the line items under current assets are:
 Cash and cash equivalents
 Financial assets at fair value cash such as trading securities, and other investments i
n quoted equity instruments.
 Trade and other receivables
 Inventories
 Prepaid Expenses
Non - Current Assets

the non-current assets take the residual definition,

this means that if the asset does not fall under current asset
then it must be non-current.
PRESENTATION OF non CURRENT ASSETS
Non Current assets is a residual definition. PAS 1, paragraph 66, simply states th
at “an entity shall classify all other assets not classified as current as noncurrent.
 Property, plant and equipment
 Long-term investments
 Intangible assets
 Deferred tax assets
 Other noncurrent assets
LIABILITIES and their CLASSIFICATION
LIABILITIES

Are the present obligations of the firm from past transactions

or events, the payment of which is expected to result in an ou
tflow of economic resources or assets.
Classifies liabilities as current and non-current.
Current Liabilities
When the firm is expected to pay the liability within its
normal operating cycle.
When the firm holds the liability primarily for the purpose
of trading.
When the liability can be paid within 12 months
PRESENTATION OF CURRENT LIABILITIES

 Trade and other payables

 Current provisions
 Short-term borrowing
 Current portion of long-term debt
 Current tax liability
Non - Current Liabilities

Also take the residual definition.

Liabilities not classified not as current are

non-current.
PRESENTATION OF non CURRENT LIABILITIES

 Noncurrent portion of long-term debt

 Finance lease liability
 Deferred tax liability
 Long-term obligations to company officers
 Long-term deferred revenue
Shareholders’ EQUITY and its components
The Shareholders’ equity or simply Equity in its raw
meaning is the excess of the firm’s assets over the firm’s
liabilities.
The Shareholders’ equity of a corporation has three basic components
• Share capital
Consists of the issuance of the company’s own sha
re as their par or stated value.
• Reserves
Consist of issuance of the company’s own share abo
ve par/stated value or additional paid in capital or som
etimes called premium on share capital.

• Retained Earnings
consist of among other things, the accumulated earnings
of the company, prior period adjustments for errors, dividends
declared/paid, effect of changes in accounting policy and
appropriated retained earnings.
Income Statement and its Form
This statement presents the result of the firm’s operation or
performance for a given time. Elements found in the statement
consist of revenue and expenses.

Forms
Functional Approach – follows the function of expenses

Natural Approach – considers the nature of expenses

STATEMENT of COMPREHENSIVE INCOME

Consists of recognized gains and losses that are not inc

luded in the income statement but are found in the stateme
nt of changes in equity.
Statement of retained earnings
The results of the current year’s operation bring bout c
hanges in the company’s retained earnings. These changes
are disclosed in the statement of retained earnings. This st
atement link the income statement results to the SFP
 Statement of changes in equity
This statement presents the development or changes th
at occur in the shareholder’s equity.
STATEMENT of CASH FLOW
Based on PAS 7
 STATEMENT of CASH FLOW
The summary of the operating, investing and financing
activities of the firm.

Cash flow and its classification

Cash flow
Refers to the movement of cash. It could either be
an inflow cash or outflow cash
Operating activities
Activities related in the generation of the principal revenue of t
he firm. Cash flow from Operating activities may include:

 Cash receipts from rental fees, service, professional fees, legal fee
s, tuition fee, etc.
 Cash used to pay salaries, utilities, purchases and payables.
 Cash receipt or disbursement from securities kept by the company
for dealing or trading. They are like merchandise held for sale.
Investing activities
Cash flows from purchasing or selling long-term assets
and other long-term investments. Cash flow from Investing activities may includ
e:
 Cash disbursement used to buy buildings, paints, equipment, f
urniture, and other fixed assets
 Cash receipts or payments from derivative transactions like fut
ure or forward contracts, swap contracts and option contracts.
 Cash receipts or payments from selling or buying of equity sec
urities or shares or debt instruments like bonds of other compa
nies for short-term or long-term purposes.
Financing activities
These are the company’s cash inflows or outflows involving its owners
and creditors. Examples of cash flow from Financing Activities may include:
 Cash receipts from issuance of the company’s ordinary shares, and preferred
shares.
 Cash disbursements used to pay acquisition of treasury shares or redeemable
preferred shares.
 Cash receipts from issuing the company’s bonds or notes.
 Cash receipts from short-term or long-term loans payable, bank payables, or
mortgage payables.
 Cash disbursement used to pay bank loan and other form of borrowings.
Notes to the Financial Statements
These are bits or sets of information that cannot be disclosed on
the face of the financial statement.

The notes may include the following:

Corporate/ company information
this may include the nature of the business, the associates or
subsidiaries of the company, and the principal activities of the
company.
Basis of Preparing the Financial Statements and the
Statement of Compliance

The basis in preparing the financial statements could be at

historical cost or at a fair value.

Summary of Significant Accounting Policies

The significant accounting policies used by the company in
carrying out their operations and preparing their financial statements.
 GROUP 1
MEMBERS

ORDOÑEZ, ROSALINDA JUVIELYN

JOYCE FAALA
EDELLE MAY PEREZ CARGASON
 GROUP 1
MEMBERS

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