Bookkeeping--Financial Statements

• Financial Statements


  -Formal reports prepared by accountant

  -Submitted to the manager
• Worksheet


  -scratch paper of the accountants

  -It should have no erasures
• Types of Financial Statements

  -Statement of Financial Position

  -Statement of Comprehensive Income

  -Statement of Cash Flows

  -Statement of Change in Equity

  -Notes to Financial Statements
• Financial Statements

  • Sound decision-making
  • Give clear picture of how much liquid funds are available
  • Need for capital infusion or borrowing money
• Purpose of Financial Statements

  • To report a variety of complex information that end users will be able to assess the financial well-being of the organization and make informed decisions
  • Enable to read, understand, interpret and analyze economic transactions translated to financial records
• Statement of Financial Position (Balance Sheet)

  • Date Prepared
  • Assets
  • Liabilities
  • Owner's Equity/Shareholder's Equity
• Assets


  -Everything of value that the company owns
• Liabilities


  -Debts or obligations
• Owner's Equity/Shareholder's Equity


  -Money invested by the company owners
• End Users

  • Stake holders, decision maker
  • Store Owners
  • Investor
  • Employees
  • Government
  • Creditor
• Statement of Financial Position

  -Structural financial statement the shows the resources employed by the business and the sources from which these were required
• Statement of Financial Position

  • Structured
  • Resources
  • Sources
• Structured


  -The presentation follows a format prescribed by a governing professional organization or government regulatory agency
• resources


  -Assets
• Sources


  -Liabilities and Owner's Equity
• Resources of the Business

  -provided by the owners and creditors

  -Claims against the assets of the business
• Claims against the assets of the business

  • Claims of the Creditors (Liabilities)
  • Claims of the Owners (Capital)
• Statement of Financial Position

  -Indicates the liquidity and solvency status of the business
• Statement of Financial Position

  • Liquidity
  • Solvency
• Liquidity


  -The ability of the business to pay its currently maturing obligations
• Solvency


  -The capital of the business to settle its noncurrent liabilities and still remain stable
• Major Accounting Elements

  • Assets
  • Liabilities
  • Owner's Equity

  -It is measured and presented in conformity with the requirement of PAS and PFRS
• PAS


  -Philippine Accounting Standard
• PFRS


  -Philippine Financial Reporting System
• Types of Report

  • Account Form
  • Report Form
• Account Form


  -Presents the three accounting elements in the following format

  -Assets are listed on the left side, liabilities listed on the right side, Owner's Equity is written below the liability section
• Report form 


  -same with the account form but its in straight format (no left or right side)
• Guidelines in preparing the Statement of Financial Position

  1. The title of the statement is written at the center
  2. The asset and liability are properly divided into two parts: the current portion and the noncurrent portion
  3. The account titles are properly identified. In case there are contra accounts, like allowances for doubtful accounts and accumulated depreciation, the main account is short extended
  4. Only the net amount like the net realizable value of receivable is extended to the money column
  5. The amount of total assets should be aligned with total liabilities and capital