Objectives- To prescribe the basis of presentation of general purpose financial statements and;
- To ensure comparability of entity’s financial statements with previous periods and with other entities’ financial statements.
Below is a summary of the overall considerations for the presentation of financial statements.
- Fair presentation and compliance with FRS
A faithful representation of the effects of transactions, events and conditions in accordance with the FRS.
Preparation of financial statements with the assumption that the business will continue indefinitely.
- Accrual basis of accounting
A method where income and expense items are recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually received or paid.
- Consistency of presentation
Presentation and classification of items in financial statements are retained from one period to the next unless the standard requires a change in presentation or there is a significant change in the nature of the entity's operations, such that another presentation would be more appropriate.
- Materiality and aggregation
Similar items of each material class are to be presented separately.
No offsetting of asset and liabilities, and income and expenses unless permitted by a Standard.
To disclose comparative information of previous period for comparative purposes.
FRS 1 also specifies the minimum line item disclosure required on the face of the balance sheet, income statement, statement of changes in equity and notes to the financial statements except for presentation of cash flow statements which is covered under FRS 7.
FRS 1 also specifies that entities disclose information that is presented in the financial statements such as the accounting policies, judgments and key sources of estimation uncertainty at the balance sheet date.
Source - ICPAS ePublication 8 November 2005 Issue 9/2005
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