Essay 1500-2000 words
state example whenever possible.
(a) Describe the general purpose of the statement of comprehenive income. In addition, explain the terms income and expenses as defined by the Conceptual Framework for Financial Reporting.
This is how part (a) should consists of:
statement of comprehensive income
-measures performance of company
comprehensive income (other comprehensive income (NOT FROM trading / operations)
Trading profit and loss account
-for a period of time usually less 1 year
Define statement of comprehensive income (aim and purpose)
Define income (revenue and gain)
Define expenses (expenese and losses)
the explain dintinguish both the revenue gain, expenses and losses
(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
This is what part (b) should consists of:
Statement of financial position
-measures of financial postition
Resources of company – what the company owns?
Source of funds – what the company owes?
Purpose of statement of financial position
Define it’s aim and pirpose, who are the users and what do they look for from this statement?
Define asset (current, non-current)
Recognition of assets
define liabilities (current, non-current)
Recognition of liabiilities
Measurement + all bases in iAS1 + fair value
Define equity (prove components accounts)
Do equity for limited company, sole trader and partnership
Statement of changes in equity (capital)
(c) Explain the accrual basis of accounting by defining the principles involved. Illstrate your answer by taking the example of te cost of sales adjustment in statement of comprehensive income.
There are 2 parts to (c):
For the accrual basis:
Explain what is accrual basis
Contrast with cash basis
Explain the matching concept
The 4 underlying principles
For the cost of sales adjustment:
Do not google, just help me to give example and then express it in wordings.