Financial Statements Running Head: FINANCIAL STATEMENTS

Financial Statements

Financial Statements Introduction The organi ations around the !orld ma"e #our "inds o# #inancial statements$ There are

t!o methods o# %re%aration o# #inancial statements$ The #inancial statements hel% in ma"ing sure that& the organi ational #inancial %osition is disclosed to the shareholders and other sta"eholders$ There are di##erent methods in 'oth IFRS and (S )AA* #or the %ur%ose o# %re%aration o# the #our #inancial statements$ Four Financial Statements There are #our main #inancial statements used in the organi ations$ The #inancial statements include income statement& statement o# o!ners+ e,uit-& cash #lo! statement and 'alance sheet$ There are t!o methods o# doing the accounting in the organi ations$ The methods o# doing the accounting include IFRS and (S )AA*$ In 'oth the methods& there are di##erences in the method o# %re%aring o# doing accounting regarding the a'o.e mentioned #our #inancial statements$ /i##erence in IFRS and (S )AA* The #irst #inancial statement ta"en into consideration in the %resent situation is 'alance sheet$ 0alance sheet is used #or the %ur%ose o# %ro.iding in#ormation regarding assets and lia'ilities o# the organi ation 1Com%arison 'et!een ($S$ )AA* and International Financial Re%orting Standards& n$d$2$ There are di##erence in the 'alance sheet %re%ared according to IFRS and (S )AA*$ In relation to 'alance sheet %re%aration& there is no re,uirement to ma"e the %re%aration o# 'alance sheet in (S )AA*$ 3n the other hand& IFRS s%eci#ies certain line items to 'e included in relation to 'alance sheet %re%aration$ In relation to (S )AA*& it has 'een %ro.ided that& i# there is a de't #or !hich there is co.enant .iolation then& it is considered to 'e a non current asset i# lender ma"es the agreement

Financial Statements to demand re%a-ment #or more than one -ear$ In the case o# %re%aration o# 'alance sheet 'ma"ing use o# IFRS& the de't associated !ith a co.enant !ill 'e considered as a current asset in

the situation !hen& agreement o# lender reaches 'e#ore the date o# %re%aration o# 'alance sheet o# the organi ation$ There is no re,uirement o# %resentation o# third 'alance sheet under (S )AA*$ 3n the other hand& in the case o# IFRS& there is a use o# third 'alance sheet at the 'eginning o# the com%arati.e %eriod$ There are certain di##erences in relation to income statement in IFRS and (S )AA*$ Regarding the e5traordinar- items& (S )AA* %ro.ides restriction regarding unusual and in#re,uent items$ 3n the other hand& unrestricted items are %rohi'ited in the case o# IFRS$ The di##erence is also in relation to disclosure o# %er#ormance measures$ The %er#ormance measures are not re,uired generall- in the case o# (S )AA*$ 3n the other hand& in the case o# IFRS& there is not de#inition o# conce%ts such as o%erating %ro#its$ The %re%aration o# cash #lo! statement !ithin the organi ation also has certain changes in relation to 'oth the methods o# %re%aration$ In the case o# (S )AA*& cash and cash e,ui.alents do not include 'an" o.erdra#ts 1)AA* .s IFRS& n$d$2$ 3n the other hand& in certain circumstances& IFRS includes 'an" o.erdra#ts in cash and cash e,ui.alents$ (nder (S )AA*& interest %aid or recei.ed is classi#ied as o%erating acti.ities$ I# di.idends are recei.ed then& the same are categori ed as o%erating acti.ities$ I# the organi ation %a-s di.idends then& these are included in #inancing acti.ities$ In the case o# IFRS& interest %aid and interest recei.ed are classi#ied as o%erating acti.ities$ There are di##erences in statement o# e,uit- regarding (S )AA* and IFRS also$ The statement o# retained earnings is made in such a manner that& the changes in %ro#its according to

Financial Statements (S )AA* and IFRS is made in a %ro%er manner$ This sho!s that& there are di##erences in the %re%aration o# #inancial statements in 'oth (S )AA* and IFRS$ Conclusion

The organi ations are re,uired to %re%are #our "inds o# #inancial statements$ The #inancial statements are %re%ared '- the organi ations according to the accounting standards$ The accounting standards ha.e 'een %ro.ided '- (S )AA* and IFRS$ The #inancial managers should ma"e sure that& the- consider 'oth the standards #or the %ur%ose o# ensuring that& the!or" #or ma"ing sure that& the- understand the guidelines in 'oth the #orms accounting standards$ The organi ational #inancial statements !ill 'e %re%ared in %ro%er manner i# the organi ations !ill consider the #inancial statements %re%aration accounting standards then& the com%liances !ill 'e carried out '- them !ithout an- "ind o# issue$

Financial Statements

Re#erences )AA* .s IFRS$ 1n$d$2$ Retrie.ed March& 2& 2816 #rom htt%:99mcgladre-$com9content9dam9mcgladre-9%d#9us:gaa%:i#rs:cash:#lo!s$%d# Com%arison 'et!een ($S$ )AA* and International Financial Re%orting Standards$ 1n$d$2$ Retrie.ed March 2& 2816 #rom htt%:99!!!$grantthornton$com9;9media9content<%age< #iles9audit9%d#s9!hite<%a%ers9)T(S=28Com%arison=28/ocument=28<=28Ma=282814:A1$ash5