ACCOUNTING REPORTS, PURPOSE OF

FINANCIAL STATEMENTS, BALANCE

SHEET, & ASSETS

Presented by Group 2
MEMBERS:
Gaviola, Lyka H.
Cabrera, Limar Jhon F.
Cabanes, Kent L.
Delantar, Reon Jay R.
Seguerra, Charles Kevin Patrick
Borres, Samantha Faith A.
Maputol, John Anthony P.
Nahid, Irene B.
 ACCOUNTING REPORTS
• Accounting information is important for stakeholders as it contains qualitative and
quantitative data useful for economic decision-making.
•Financial information is presented and summarized in financial statements.

• Valix (2012) defines financial statements as:

“The means by which information accumulated and processed in financial
accounting is periodically communicated to the users.”

• Financial statements are the end product of the financial accounting process.
•Financial statements should be prepared in interim periods for internal use.
• It is mandatory to prepare financial statements annually.
EXAMPLE
PURPOSE OF FINANCIAL
STATEMENT
Financial statements presentation purports the following reasons, (Valix 2012), started;

It provides information about the financial position,

1. performance and cash inflows of an enterprise that is useful
to wide range of users in making economic decisions.

2. It shows the results of the management's stewardship of the

resources entrusted to it.

3. It provides information about an enterprise's assets,

liabilities, equity, Income and expenses, including gains and
losses and cash flows.
 The Financial Statement is
composed of the following:

BALANCE
SHEET
 INCOME
STATEMENT
STATEMENT OF
CHANGES IN
EQUITY
CASH FLOW
STATEMENT
 NOTES OF
FINANCIAL
STATEMENT
 BALANCE SHEET
Balance Sheet is a report showing the financial position of a
company on a particular date. The three elements are
assets, liabilities, and equity.
ASSETS
According to ASC SFAS No. 1, assets are classified into two namely, current
assets and non-current assets. Assets are current when it is expected to be
realized in or held for sale of consumption in normal course of enterprise's
operating cycle. It is held primarily for trading purposes, or for the short
term and expected to be realized when 12 months of the balance sheet.
OPERATING CYCLES
are time between the acquisition of material put into process and
realization in cash and an instrument that is readily convertible to cash.
ACCOUNT TITLES
are assigned name and titles for the accountant and used for conversation
for ease of reference. The following are the bank drafts.
CASH
is any medium of exchange that a bank will accept at face value. It
includes coins and currencies, checks money orders and bank drafts..
ACCOUNTS RECEIVABLES
are claims against debtors, customers or clients arising from services
rendered on account and the sale of merchandise.
 NOTES RECEIVABLES
are claims against debtors, customers or client for the services rendered
evidenced by written promise to pay issued by the debtor.
MERCHANDISE INVENTORIES
are good on hand available for sale.
SUPPLIES/SUPPLIES ON HAND
are consumable goods used in the course of business. It represents the
cost of supplies on hand. It can be classified as office or store supplies,
papers, pencils, pens, folders etc. are the examples.
PREPAID EXPENSES
are expenses paid in advance. Example: six months rental paid in
advance (Prepaid rent), one year insurance premium (Prepaid
Insurance).
NONCURRENT ASSETS
The ASC states that noncurrent assets are "all other assets
not classified as current should be classified as noncurrent."

PROPERTY, PLANT AND EQUIPMENT/FIXED

ASSETS
Per PAS # 16. These are the tangible assets that are held by enterprise for
use in the production or supply of goods and service or for rental to others
for administrative purposes which are expected to be used during more
than one period.
Accumulated Depreciation is an account that contains the sum of periodic
depreciation charges. It is a contra-account that represents the whole
amount from depreciation expenses charged in the past and current
periods.

Equipment are tangible assets which are tool or instruments used in the
operation of business. It has its own specific design and style to handle
activities both for production and administrative purposes. It can be
classified as store equipment or office equipment. They include computers,
air-conditioning units, calculator, typewriter, cash register, and other
similar assets.

Delivery Equipment include assets used for transporting merchandise.

Machinery is tangible assets that has its own system to work in order to
produce products and to provide services to customers.

Furniture and Fixtures are properties owned by the business which are not
part of the building property. These quickly depreciate compared to other
assets. These include the following office tables, filing, cabinets, chairs,
showcases and other similar items used in the operation of business.

Intangible Assets are the identifiable non-monetary assets without physical

substance. They provide future economic benefits to the company. They
include franchise, copyrights, patent trademarks and computer software.
 LIABILITIES
it is defined ASC Framework as "present obligations of an enterprise of
which is expected to result in an outflow from the enterprise arising from
past transactions or events, the settlement of which is expected enterprise
or resources embodying economic benefits. "These are debts and
obligation of the business to creditors which is not recognized unless
incurred. It can be settled through cash or promissory note.

CURRENT LIABILITIES
It is a present obligation that is expected to be settled in the normal
operating cycle of the business. It is due to be settled within one year from
the balance sheet. The following are account titles used in current and
non-current liabilities.
Account Payable are the amount due to creditors for assets acquired in
account

Notes Payable are the amount due to credits to creditors supported by

promissory

Salaries Payable are unpaid salaries to the employees at the end of the
accounting period.

Taxes Payable are present obligation due to the government.

Interest Payable are interest incurred on the loan but they are not yet paid
at the end of the period.
Non- current Liabilities It is long term liabilities expected to be settled for
more than a year

Mortgage Payable is long term debts secured by collateral

 CAPITAL / EQUITY
OWNER’S CAPITAL
is the account that represents the equity or claims of the owner on the
assets of the business. It is the residual interest in the assets of the
business. It is the difference of total assets and total liabilities.

OWNER’S DRAWING
account charged to the owner's drawing are cash or other assets
withdrawn or taken by the owner form the business for personal use.
 INCOME
STATEMENT
This is a report showing the
financial performance of an
enterprise for a given period
time. It shows the income
results and the expenses
incurred during the operation of
the business.
 REVENUE OR INCOME
According to ASC revenue is defined as "gross inflow of
economic benefits during the period in the form of inflows or
enhancement on assets or decrease in liabilities the results
in increase in equity, other those relating to contributions
from the owners.". It is the income earned in providing
services to customers and from the sales of merchandise as
well.
The following are the common income titles used:

Sales are total sales of merchandise sold.

Professional fee income is income earned after rendering professional

service such as CPA's doctors, lawyers.

Rent Income is the amount of lease/rental earned for the period.

Service Income/Revenue is the amount of income earned from services

rendered from service concern business.

Interest Income is the amount earned for lending money

THANK YOU!