1. Going Concern and Accrual Foundations
Financial statements must be prepared on a going concern basis unless management intends to liquidate the entity or cease operations. If the going concern assumption is highly uncertain, that fact must be explicitly disclosed. Furthermore, entities must use accrual accounting to record the financial effects of transactions when they occur, rather than when cash is received or paid.
2. The Complete Financial Statement Package
A complete financial reporting package under global standards includes:
  • Statement of Financial Position (Balance Sheet): Shows the financial position at a specific point in time.
  • Statement of Profit or Loss and Other Comprehensive Income: Details performance over a given period.
  • Statement of Changes in Equity: Reconciles the opening and closing balances of equity accounts.
  • Statement of Cash Flows: Classifies cash movements by operating, investing, and financing activities.
  • Notes to the Financial Statements: Discloses significant accounting policies, judgments, and detailed breakdowns of financial numbers.

 
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