CHAPTER 1: OVERVIEW OF ACCOUNTING a.

Production – is a process by
which resources are
DEFINITION OF ACCOUNTING transformed into finished
- Accounting is the process of goods
identifying, measuring, and b. Casualty – is an
communicating economic unanticipated loss from
information to permit informed disasters
judgments and decision by users of
the information (American Institute B. Measuring
of Accountants) o Involves assigning numbers,
normally in monetary terms
A. Identifying to the economic transactions
o is the process of analyzing and events
events and transactions to o Historical cost, fair value,
determine whether or not present value, realizable
they will be recognized value, current cost,
o Recognition – refers to the inflationary cost
process of including the
effects of an accountable C. Communicating
event in the statement of o Process of transforming
financial position or the economic data into useful
statement of comprehensive accounting information for
income through a journal dissemination to user
entry o Recording – process of
o Accountable event (economic systematically committing
activity) – is one that affects intro writing the identifies
the assets, liabilities, equity, and measure accountable
income, and expenses of an events in the journal through
entity journal entries
o Non-accountable events – are o Classifying – involves
not recognized in the books grouping of similar and
but as disclosure only, if they interrelated items into their
have accounting relevance respective classes through
(recorded through a posting in the ledger
memorandum entry) o Summarizing – putting
Types of events or transactions together or expressing in
A. External events – events that involve condensed forms the
the entity and an external party recorded and classifies
a. Exchange – is the reciprocal transaction and events
giving and receiving of
economic benefits or BASIC PURPOSE OF ACCOUNTING
discharging economic - Provide quantitative information
obligations primarily financial in nature that is
b. Non-reciprocal transfer – is a useful for making economic
one-way transaction wherein decisions
one part gives without - Economic entities – use accounting
something in return data to:
c. External events other than o record economic activities
transfer – involves changes o process data
in economic o disseminate information
resources/obligations intended to be useful in
without transfers making economic decisions
B. Internal Events – events that do not
involve an external party ECONOMIC ENTITIES
 - Separately identifiable combination B. Art – because accounting required
of persons and property that uses or the use of creative skills and
control economic resources to judgment
achieve certain goals or objectives C. Information system – because it
identifies and measures economic
A. Non-for-profit entity activities, processes information into
o One that carries out some financial reports, and communicate
socially desirable needs of these to decision makers
the community or its D. Language of business – because it
members and whose is fundamental to the
activities are not directed communication of financial
towards making profit information
B. Business Entity
o One that operated primarily CREATIVE AND CRITICAL THINKING
for profit A. Creative thinking – involves the use
of imagination and insight to solve
ECONOMIC ACTIVITIES problems by finding new
- Affect economic resources (assets) relationships among items of
and obligations (liabilities) and information
consequently the equity of the B. Critical thinking – involves the
economic entity logical analysis of issues using
- Production and consumption, inductive or deductive reasoning to
exchange, income distribution, test new relationships to determine
savings and investments their effectiveness

TYPES OF ACCOUNTING INFORMATION ACCOUNTING CONCEPTS

A. Quantitative information – are - Refer to the principles upon which
expressed in numbers, quantities, or the process of accounting is based
units
B. Qualitative information – are A. Accounting assumptions – are the
expressed in words or descriptive principal concepts or principles and
form basic notions that provide the
C. Financial information – are foundation of accounting process
expressed in money B. Accounting theory – logical
reasoning in the form of a set of
TYPES OF INFORMATION AS TO NEEDS broad principles; provide a general
A. General Purpose – is designed to frame of reference by which
meet the common needs of most accounting practice can be
statement users which is governed evaluated; guide the development of
by generally accepted accounting new practices and procedures
principles as represented by the C. Double-entry system – each
Philippine Financial Reporting accountable event is recorded as
Standards debits and credits
B. Special Purpose – is designed to D. Going concern assumption – where
meet the specific needs of particular the entity is assumed to carry on its
statement user provided by other operations for an indefinite period of
types of accounting other than time
financial accounting E. Separate entity (accounting entity,
business entity concept, entity
ACCOUNTING AS A/AN concept) – assumes that the
A. Social Science – because economic entity is separate and
accounting is a body of knowledge distinct from its owners
which has been systematically F. Stable monetary unit (monetary unit
gathered, classified, and organized assumption) – assets, liabilities,
equity, revenues, revenues, and
 expenses are stated in a common S. Residual equity – applicable when
unit of measure (peso) and any there are two classes of shares
changes in its purchasing power is issued
disregarded or considered T. Realization – is the process of
insignificant converting non-cash assets into
G. Time period (periodicity, accounting cash or claims for cash
period) – means that the life of the U. Prudence (conservatism) – refers to
entity is divided into a series of the use of caution when making
reporting periods estimates under conditions of
H. Materiality – states that if an uncertainty
information is omitted or misstated
it may influence the economic BRANCHES OF ACCOUNTING
decisions made A. Financial Accounting – focuses on
I. Cost-benefit (cost constraint, the preparation of general-purpose
reasonable assurance) – means financial statements
that the cost of implementing a a. General-purpose financial
decision should not exceed the statements – cater to the
benefits that can be derived from it common needs of external users
J. Accrual – states that revenue is are governed by PFRS
recognized when earned while b. Financial reporting – focuses on
expenses are recorded when information provided outside the
incurred financial statements that assists
K. Historical cost concept ( cost in the interpretation of a
principle) – states that the value of complete financial statements
an asset is determines on the basis c. Financial statements – consist
of acquisition cost of the basic financial statements
L. Concept of articulation – means including the notes thereto
that all of the components of a d. Financial report – includes other
complete set of financial statement information provided under
are interrelated financial reporting plus the
M. Full disclosure principle – entity’s financial statements
recognized that the nature and
amount of information included in Objectives of Financial Accounting
the financial statements reflect a - Primary objective: provide
series of judgmental trade-offs information about an entity’s
N. Consistency concepts – states that economic resources, claims to those
financial statements are prepared on resources, and change in those
the basis of accounting principles resources
that are applied consistently from - Secondary objective: provide
one period to another period information in assessing the
O. Matching concept (association of management stewardship
cost and effect) – means that costs
are recognized when related B. Management Accounting – is the
revenues are recognized accumulation and communication of
P. Fund theory – where the objective is information for use by internal users
the custody and administration of a. Management advisory services
funds – provides services to clients on
Q. Entity theory – where the accounting areas of accounting, finance,
objective is geared towards proper business policies, organizational
income determination procedure, and other phases of
R. Proprietary theory – where the business
accounting objective is proper asset
valuation C. Cost Accounting – is the systematic
recording and analysis of the cost of
 materials, labor, and overhead o The concept for general
incident to production purpose financial reporting
D. Auditing – process of evaluating the o Summary of terms and
correspondence of certain concepts that underline the
assertions with established criteria preparation and presentation
and expressing an opinion thereon of financial statements
E. Tax accounting – is the preparation
of tax returns and rendering tax PURPOSE OF CONCEPTUAL FRAMEWORK
advices - Assist the International Accounting
F. Government accounting – Standards Board in developing
emphasizes on the custody6 of standards that are based on
government funds, purpose for consistent concepts
which the funds are committed, - Assist preparers in developing
responsibility, and accountability of consistent accounting policies when
its use no standard applies to a particular
G. Fiduciary accounting – is the transaction or when a standard
handling of accounts managed by a allows a choice of accounting policy
person entrusted with the custody - Assist all parties in understanding
and management of property for the and interpreting the standards
benefit of another
H. Estate accounting – is the handling AUTHORITATIVE STATUS
of accounts for fiduciaries who wind - Can only be applied on a particular
up the affairs of a deceased person transaction when there is no
I. Institutional accounting – is the accounting standard or
accounting for not-for-profit entities interpretation that specifically deals
J. Social accounting (social and with that particular transaction
environment accounting, social - The conceptual framework is not an
responsibility accounting) – is the accounting standard
process of communication the
social and environmental affects of SCOPE OF THE CONCEPTUAL
an entity’s economic actions to the FRAMEWORK
society - Objective of financial reporting
K. Accounting systems – is the - Qualitative characteristics of useful
installation of procedures for the financial information
accumulation of financial data and - Financial statements and the
designing accounting forms reporting entity
L. Accounting research – pertains to - The elements of the financial
the careful analysis of economic statements
events and other variables to - Recognition and derecognition
understand their impact on - Measurement
decisions - Presentation and disclosure
- Concepts of capital and capital
maintenance
CHAPTER 2 : CONCEPTUAL FRAMEWORK
FOR FINANCIAL REPORTING OVERVIEW OF CONCEPTUAL FRAMEWORK

NATURE OF THE CONCEPTUAL

FRAMEWORK
- The conceptual framework forms
the theoretical foundation of
accounting
- It is the underlying theory for the
development and revision of
accounting standards
- It is also a document that contains:
 OBJECTIVE OF FINANCIAL REPORTING
- Provide information about the
reporting entity that is useful to
existing and potential investors,
lenders, and other creditors in
making decisions about providing
resources to the entity

LIMITATIONS OF FINANCIAL REPORTING

- It does not and cannot provide all of
the information that existing and Fundamental characteristics
potential investors, lenders and 1. Relevance – where information can
other creditors need make difference in the decisions of
- It is not designed to show the value users
of an entity, but this report provides a. Predicting value – where the
information to help the primary information can help users in
users estimate the value of the entity making predictions about
- They are not intended to provide future outcomes
common information to users and b. Confirmatory value – the
cannot accommodate every request information can help users in
for information confirming their previous
- They are based on estimates and predictions
judgments rather than exact c. Materiality – dictates that
depiction strict adherence to
accounting standards is not
USERS OF INFORMATION required when the items are
A. Primary users – parties to whom not significant enough to
general-purpose financial reports are affect the decision of a
primarily directed primary user and the fairness
a. Existing and potential of the financial statements
investors i. The materiality of an
b. Lenders and other item depends on
creditors relative size and
B. Other users – parties other than the nature rather than
primary users who find the general- absolute value
purpose financial reports useful but ii. There is no uniform
are not primarily directed to them quantitative threshold
a. Employees of materiality as it
b. Customers depends on the
c. Government and its professional
agencies judgment of the
d. Suppliers accountant
e. General public
QUALITATIVE CHARACTERISTICS 2. Faithful representation – the
- Qualities or attributes that make information provides a true correct
financial information useful to the and complete depiction of the
users in making economic decisions economic phenomena that it
o Fundamental qualitative purports to represent
characteristics – relate to the a. Prudence (conservatism) –
content (substance) making the exercise of care and
information useful to users caution when dealing
o Enhancing qualitative uncertainties in their
characteristics – improve or measurement process
increase the usefulness of b. Substance over form –
information states that if information
 represent faithfully the be able to influence their
transactions and other decisions
events it purports, it is b. Understandability –
necessary that the information is presented in a
transactions and other clear and concise manner
events are accounted for in i. Users should have
accordance with their reasonable
economic substance and not knowledge of
merely their legal form business activity
c. Completeness – states that ii. Users are willing to
all information necessary for analyze the
users to understand the information diligently
phenomenon being depicted
is provided FINANCIAL STATEMENTS
d. Neutrality – means - Objective: Provide financial
information is selected or information about reporting entity’s
presented without bias assets, liabilities, equity, income, and
e. Free from error – states that expense
there are no errors in the - Examples:
description and in the o Statement of financial
process by which the position (assets, liabilities,
information is selected and and equity)
applied o Statement of financial
performance (income and
Enhancing characteristics expenses)
1. Comparability – identify similarities o Other statements and notes
and differences between different (cash flows contributions
sets of information that are provided from and distribution to
by: owners)
a. A single entity but in single
different periods REPORTING ENTITY
b. Different entity but in - This refers to an entity that is
different periods required or chooses to prepare
c. Consistency – refers to the financial statements
use of the same accounting - It can be a single entity, a portion of
methods from period to an entity, or more than one entity
period: o Sole proprietorship,
i. Within one company partnership, or corporation
ii. Single period across o Parent company
companies o Parent and its subsidiaries as
2. Verifiability – occurs when a single reporting entity
transaction is supported by evidence o Two or more entity not as
that an accountant would look into parent and subsidiary
and arrive as the same conclusion
a. Direct verification involves ELEMENTS OF FINANCIAL STATEMENTS
direct observation A. Asset – is a present economic
b. Indirect verification involves resource controlled by the entity as a
checking the inputs to a result of past events; it is an
model or formula and economic resource that has the
calculating the outputs using potential to produce economic
the same technology benefits
3. Timeliness and understandability a. Right that corresponds to an
a. Timeliness – information is obligation of another party:
available to users in time to  Right to receive cash,
goods, or services
  Right to exchange  Used to promote
economic resources efficiency and cost
with another party on savings
favorable terms  Used to settle a
 Right to benefit from liability
an obligation of c. Control
another party to  The entity has the
transfer an economic exclusive rights over
resource if a specified the benefits of an
uncertain future event asset and the ability
occurs to prevent others
Right that do not correspond from accessing those
to an obligation of another benefits
party:  Control does not
 Right over mean that the entity
physical objects could ensure that the
 Right over to use resource will produce
intellectual economic benefits in
property all circumstances
b. Potential to produce  Control links and
economic benefits economic resources
 The asset is the to an entity and
present right that has indicates the extent to
the potential t which an entity
produce economic should account for
benefits and not the that economic
future economic resource
benefits that the right  Control normally
may produce stems from legal,
 An asset can exist enforceable rights
even if the probability  Physical possession
it will produce is also not always
benefits is low necessary for control
although that low to exist
probability affects the
decisions and B. Liability – is a present obligation of
whether the asset is the entity to transfer an economic
to be recognized, how resource as a result of past events
it is measured, what a. Obligation – is a duty or
information is the responsibility that an entity
provided about the has no practical ability to
asset and how the void
information is  Legal obligation is an
provided obligation that result
 Sold leased from a contract
transferred or legislation or other
exchange for other operation of law
assets  Constructive
 Used singly or in obligation is an
combination with obligation that results
other assets to from an entity’s actins
produce goods or that create a valid
provide services expectation and
 Used to enhance the others that the entity
value of other assets will accept and
 discharge certain  as a consequence,
responsibilities the entity will or may
b. Transfer of an economic have to transfer an
resource economic resources
 The liability is the that it would not
obligation that has otherwise have had to
the potential to transfer
require the transfer of C. Equity – is the residual interest in the
economic resources assets of the entity after deducting
to another party and all its liabilities
not the future a. Sole proprietorship –
economic benefits Owner’s equity or Capital
that the obligation b. Partnership – Partner’s
may cause to be equity
transferred c. Stockholders – Stockholders’
 A liability can exist or Shareholder’s equity
even if the probability
of a transfer of an D. Income – increases in assets, or
economic resources decreases in liabilities, that result in
is low, although that increase in equity, other than those
low probability relation to contributions from
affects the decisions holders of equity claims
and whether the  Revenue arise from
liability is to be the ordinary course of
recognized, how it is business
measure, what  Gains other items that
information needs to meet the definition of
be provided about the income and do not
liability, and how that arise in the ordinary
information is course of business
provided E. Expenses – are decreases in assets,
 Pay cash deliver or increases in liabilities, that result
goods or render in decreases in equity, other than
services those relating to distribution to
 Exchange assets with holders of equity claims
another party on  Regular expenses are
unfavorable terms incurred in the
 Transfer assets if a ordinary course of
specified uncertain business
future event occurs  Losses are expenses
 Issue financial that do not arise in
instruments that the ordinary course of
obliges the entity to business
transfer an economic
resource RECOGNITION
c. Present obligation as a result - Is the process of including in the
of past events – the statement of financial position or the
obligation must be a present statement or the statement of
obligation to exist as a result financial performance and item that
of past events meets the definition of one of the
 the entity has already financial statement elements
obtained economic - This involves recording the item in
benefits or taken an words and in monetary amount and
action including that amount in the totals of
either of those statements
 liability, in an orderly
RECOGNITION CRITERIA transaction between market
- It meets the definition of an asset, participants at the
liability, equity, income or expense measurement date
- Recognizing it would provide useful b. Value in use and fulfillment
information (relevant and faithfully value
represented information) i. Value in use –
present value of the
DERECOGNITION cash flows or other
- Is the removal of a previously economic benefits
recognized asset or liability from the that an entity expects
entities statement of financial to derive from the use
position of an asset from its
- It occurs when the item no longer ultimate disposal
meets the definition an asset or ii. Fulfillment value – is
liability, such as when the entity the present value of
loses control of all or part of the the cash, or other
asset, or no longer has a present economic resources
obligation for all or part of the entity that an entity expects
- Derecognition if the assets or to be obligated to
liabilities that have expired or have transfer as it fulfills a
been consumed, collected, fulfilled liability
or transferred, and recognizes any c. Current cost
resulting income and expenses i. Current cost of an
- Continues to recognize any assets asset – is the cost of
or liabilities retained after the an equivalent asset at
recognition and no income or the measurement
expense normally recognized on the date, comprising the
retained component unless there is consideration that
a change and its measurement basis would be paid at the
measurement date
MEASUREMENT plus the transaction
- Involves quantifying an item in costs that would be
monetary terms thus necessitating incurred on that date
the selection of an appropriate ii. Current costs of a
measurement basis liability – is the
A. Historical cost consideration that
o The historical cost of an would be received for
asset is the consideration an equivalent liability
paid to acquire the asset plus at the measurement
transaction costs date minus the
o The historical cost of a transaction costs that
liability is the consideration would be incurred at
received to incur the liability that date
minus transaction costs
o In cases where it is not PRESENTATION AND DISCLOSURE
possible to identify the cost - A reporting entity communicated
the resulting asset or liability information on the elements by
recognized at current value representing and disclosing
B. Current value – measures reflect information in the financial
changes in values at the statements
measurement date A. Classification – is a sorting of the
a. Fair value – is the price that elements on the basis of shared
would be received to sell an similar characteristics
asset or paid to transfer a
 o Assets or liabilities are A. Intra-comparability – is the
classifies as current and comparability of the FS on one entity
noncurrent and then each from one period to another
component of those B. Inter-comparability – is the
classification are comparability of FS between
subclassified separately different entities
o Corporation’s equity may be
classified into share capital, FINANCIAL STATEMENTS
retain earning and other - Structured representation of an
components entity’s financial position and the
o Income expenses are results of operations
classified as recognized - End-product of the financial
either in: accounting process by which
 In the income financial information are gathered
statement and processed and periodically
 In other communicated to users
comprehensive - General purpose financial
income statements cater to the most
B. Aggregation – is the adding of the common needs of a wide range of
elements that have similar or shared external users
characteristics and are included in
the same classification; it PURPOSE OF FINANCIAL STATEMENTS
summarizes a large volume of detail, - Primary objective: provide
thus making information more information about the financial
useful position, financial performance, and
cash flows of an entity that is useful
CONCEPTS OF CAPITAL to a wide range of users in making
- Financial concept of capital where economic decisions
capital is regarded as the invested - Secondary objective: show results of
money or invested purchasing power management’s stewardship over the
- Physical concept of capital where entity’s resources
capital is regarded as the entity’ - Financial statement provides
productive capacity information about an entity’s:
CONCEPTS OF CAPITAL MAINTENANCE o Assets
- Financial capital maintenance is o Liabilities
when profit is earned if the net o Equity
assets at the end of the period o Income expenses
exceeds the net assets at the o Contribution and distribution
beginning of the period to owners
- Physical capital maintenance where o Cash flows
profit is earned only if the entity’s
productive capacity at the end of the COMPLETE SET OF FINANCIAL
period exceed the productive STATEMENTS
capacity at the beginning of the - Statement of financial position
period - Statement of profit or loss and other
comprehensive income
- Statement of changes in equity
CHAPTER 3: PRESENTATION FINANCIAL - Statement of cash flows
STATEMENTS - Notes to the financial statements
- Additional statement of financial
COMPARABILITY position
- Requires consistency in the adoption
and application of accounting GENERAL FEATURES OF FS
policies and in the presentation of A. Fair presentation and compliance
financial statements with PFRS
 o Is faithfully representing in o Measuring the assets net
the FS the effects of valuation allowances is not
transaction and other events offsetting
in the accordance with the F. Frequency of reporting
definition of the elements of o Financial statements are
the FS prepared at least manually
o It also requires the proper o If an entity changes its
selection and application of reporting period:
accounting policies, proper  The period covered by
presentation of information, the financial
and provision of additional statements
disclosure  The reason for the
B. Going concern change in the
o Profitable operations: reporting period
 The entity is a going  The facts that
concern without amounts presented in
detailed analysis the financial
o Existence of material statements are not
uncertainties: entirely comparable
 Disclosure of the G. Comparative information
uncertainties o PAS 1 requires an entity to
 The FS should be present comparative
prepared using information in respect of the
another basis preceding information for all
 Disclosure of the amounts reported in the
basis of presentation current period’s financial
 Reason for not statements
regarding as a going o PAS 1 also permits entities to
concern provide information in
C. Accrual basis of accounting addition to the minimum
o All FS shall be prepared using requirements
the accrual basis of o Additional statement of
accounting except for the financial position is allowed:
statement of cash flows  The entity applies an
which is prepared using a accounting policy
cash basis retrospectively,
D. Materiality and aggregation makes a retrospective
o Each material class of similar restatement of items
items is presented separately in its FS or
(line item) reclassifies them in
o Dissimilar items are its FS
presented separately unless  The instance has a
they are immaterial material effect on the
o Individual immaterial items information in the
are aggregated with other statement of financial
items position at the
E. Offsetting beginning of the
o Assets and liabilities or preceding period
income and expenses are H. Consistency of presentation
presented separately and are o The presentation and
not offset unless required or classification of items in the
permitted by PFRS FS is retained from one
o Offsetting is permitted when period to the next period
it reflects the substance of unless there is a change in
the transactions presentation:
  Is required by a PFRS - Regardless of presentation, it should
 Results in information be disclosed that assets and
that is reliable and liabilities are recovered or settled:
more relevant o Within 12 months
o Beyond 12 months, after the
STRUCTURE AND CONTENT OF FS reporting period
- The following information shall be - Operating cycle is the time between
displayed prominently and the acquisition of assets for
repeatedly whenever relevant: processing and their realization into
o The name of the reporting cash or cash equivalents
entity - Operating cycle is not identifiable, it
o Whether the statements are is assumed to be 12 months
for the individual entity or for - Assets and liabilities that are
a group of entities realized or settled as part of the
o The date of the end of the operating cycle is current even if
reporting period or the period they are realized or settled beyond
or the period covered by the 12 months after the reporting date
FS - Assets and liabilities that do not
o The presentation currency form part of the operating cycle are
and level of rounding used considered as current only if they are
realized or settled within 12 months
MANAGEMENT’S RESPONSIBILITY OVER after the reporting date
FS - Deferred tax assets and liabilities are
- The presentation and fair always presented as non-current
representation of FS in accordance regardless of their expected date of
with PFRS reversal
- Internal control over financial
reporting REFINANCING AGREEMENT
- Going concern assessment - Refinancing refers to the
- Oversight over the financial reporting replacement of an existing
process debt/obligation with a new one but
- Review and approval of financial under different terms
statements - Loan facility refers to a credit line
- Long-term obligation that is
STATEMENT OF FINANCIAL POSITION maturing 12 months after the
- It shows the entity’s financial reporting period is classified as
condition (status of assets, current even if a refinancing
liabilitie4s, and equity) as at a agreement to reschedule payments
certain date on a long-term basis is completed
- PAS 1 does not prescribe the order after the reporting period and before
or format of presenting items in the the financial statements are
statement of financial position authorized to issue
o Classified shows current and - The obligation is classified as non-
non-current current if the entity has the right, at
o Unclassified presents based the end of the reporting period, to
in liquidity without distinction roll over the obligation for at least 12
as to current and non-current months after the reporting period
- A classified presentation is used under an existing loan facility
except when an unclassified
presentation provides information LIABILITIES PAYABLE ON DEMAND
that is reliable and more relevant - Liabilities that are payable upon the
- Mixed presentation is also required demand of the lender are classifies
for entities with diverse operations as current
- Long-term obligation may become
payable on demand as a result of a
 breach in the loan provision is o Income tax provisions
classifies as current o Result of discontinued
- The lender provides the entity a operations
grace period: - Items excluded in the profit or loss:
o If given before or at a o Correction of prior period
reporting date: non-current error: adjustment to
o If given after the reporting beginning balance of
date: current retained earnings
o Change in accounting policy:
PROFIT OR LOSS PRESENTATION adjustment to beginning
- As a single statement of profit or balance of retained earnings
loss and other comprehensive o Other comprehensive income
income (statement of o Transaction with owners
comprehensive income)
- As two statements: PRESENTATION OF EXPENSES
o Statement of profit or loss - Nature of expense (Depreciation,
(income statement) purchase of material, transport cost,
o Statement presenting employee cost, and advertising cost)
comprehensive income - Function of expense (cost of sales,
distribution cost, administrative
PROFIT OR LOSS expenses, and other functional
- Profit or loss is income less expenses)
expenses, excluding components of o If the function of expense is
other comprehensive income used, additional disclosures
- Income and expenses are usually on the nature of the
recognized under the statement of expenses shall be provided
profit or loss:
o They are classified as items OTHER COMPREHENSIVE INCOME
of other comprehensive - It comprises items of income and
income expenses (including reclassification
o They are required by other and adjustment) that are not
PFRS to be recognized recognized in profit or loss as
outside the statement of required or permitted by other PFRS.
profit or loss They are usually accumulated as
- Items included in the profit or loss: separate components of equity
o Revenue, presenting - Reclassification adjustments are
separately interest revenue amounts reclassified to profit or loss
o Finance costs in the current period that were
o Gains and losses arising recognized in other comprehensive
from derecognition of income in the current or previous
financial assets measured at periods
amortized cost
o Impairment losses and TOTAL COMPREHENSIVE INCOME
impairment gains on - Refers to the change in equity during
financial assets the period resulting from
o Gains or losses on transactions and other events, other
reclassification of financial than those changes from
assets from amortized cost transaction with owners in their
to fair value through other capacity as owners
comprehensive income to - It is the sum of the profit or loss and
fair value through profit or other comprehensive income
loss
o Share in profit or loss of STATEMENT OF CHANGES IN EQUITY
associates and joint ventures - Effects of change in accounting
policy (retrospective application) or
 correction of prior period error
(retrospective element)
- Total comprehensive income for the
period
- For each component of equity, a
reconciliation:
o Profit or loss
o Other comprehensive income
o Transaction with owners