Category Archives: Theory of Accounts

Cash & Cash Equivalents

PAS 7 – Statement of Cash flows Cash – most liquid assets, cash on hand and demand deposits unrestricted. Cash Equivalents – Short term highly liquid investments readily convertible to cash. *Presented as one line item in the balance sheet. … Continue reading

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PAS 1 Presentation of FS

Objectives of Standards  To prescribe basis for preparation of FS. Ensure comparability of FS for Prior Periods and Other Entities. Scope Applies to  all general purpose FS in accordance with PFRS Does not apply to condensed interim FS prepared in … Continue reading

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Measurement of the Elements of Financial Statements

Measurement of the Elements of Financial Statements Measurement involves assigning monetary amounts at which the elements of the financial statements are to be recognized and reported.  The Framework acknowledges that a variety of measurement bases are used today to different degrees and … Continue reading

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Recognition of Elements of Financial Statements

The Elements of Financial Statements Financial statements portray the financial effects of transactions and other events by grouping them into broad classes according to their economic characteristics. These broad classes are termed the elements of financial statements. The elements directly … Continue reading

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Primary vs Secondary Characteristics

Primary Characteristics Relevance – Information in financial statements is relevant when it influences the economic decisions of users. It can do that both by (a) helping them evaluate past, present, or future events relating to an enterprise and by (b) confirming … Continue reading

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Underlying Assumptions

The Framework sets out the underlying assumptions of financial statements: Accrual Basis.The effects of transactions and other events are recognized when they occur, rather than when cash or its equivalent is received or paid, and they are reported in the … Continue reading

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General Purpose Financial Statements

The Framework addresses general purpose financial statements including consolidated financial statements that a business enterprise prepares and presents at least annually to meet the common information needs of a wide range of users external to the enterprise. Therefore, the Framework does not … Continue reading

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