FIM01- FUNDAMENTAL OF FINANCIAL

MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

FINANCIAL STATEMENTS
The formal report prepared by the accountant.
Its objective is to provide information concerning the financial position,
performance and cash flows of a company needed by various users in making
sound economic decisions.
THE BASIC FINANCIAL STATEMENTS (PAS 1)
1. Statement of Financial Position
2. Income Statement
3. Statement of Changes in Equity
4. Statement of Cash Flows
5. Notes to Financial Statements

STATEMENT OF FINANCIAL POSITION

STRUCTURE

Notice that the heading specifically identifies four significant items related
to the statement:

Name of the entity, ALDUB CORPORATION

Title of the statement, Statement of Financial Position.
Specific date of the statement, At December 31, 2016.
Unit of measure (Amount in million pesos).

PARTS
1. ASSET resources owned by the company
2. LIABILITIES- present obligation of the company
3. EQUITY- residual amount

ILLUSTRATION

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 FIM01- FUNDAMENTAL OF FINANCIAL
MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

EXAMPLE (from previous feasibility study)

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 FIM01- FUNDAMENTAL OF FINANCIAL
MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

INCOME STATEMENT
STRUCTURE

Notice that the heading specifically identifies four significant items related to the
statement:

Name of the entity, ALDUB CORPORATION

Title of the statement, Income Statement.
Specific date of the statement, FOR THE YEAR ENDED December 31, 2016.
Unit of measure (Amount in million pesos).

ILLUSTRATION

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 FIM01- FUNDAMENTAL OF FINANCIAL
MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

STATEMENT OF CHANGES IN EQUITY

Shows the changes in owners equity, partners equity or shareholders
equity.
EXAMPLE ( from previous feasibility studies)

STATEMENT OF CASH FLOWS

Summary of the operating, investing, and financing activities of the firm.
Operating Activities (Related to principal revenue of the firm)
Cash receipts from rental fees, service fee, professional fee, etc.
Cash used to pay salaries, utilities, purchases, payables.

Investing Activities (Cash flow from purchasing and selling long term
assets and other long term investments)
Cash disbursement used to buy land, building....
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 FIM01- FUNDAMENTAL OF FINANCIAL
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02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA
Cash receipts from selling of land, building...
Cash receipts or payments from selling or buying of investments
from other companies.
Financing Activities (cash flows from the owners and creditors)
Cash receipts from issuance of ordinary shares/preference
shares
Cash receipts from companys bonds or notes.
Cash disbursement used in paying bank loan

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 FIM01- FUNDAMENTAL OF FINANCIAL
MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

NOTES TO FINANCIAL STATEMENTS

are the bits or sets of information that cannot be disclosed on the face of the
financial statements.
ILLUSTRATION

NOTE 7 (ALDUB CORPORATION)

Trade and other receivables

Trade 12,779
Notes 4,440
Government 1,374
Total 18,593
Less: Allowance for doubtful accounts (724)
Net realizable value 17,869

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 FIM01- FUNDAMENTAL OF FINANCIAL
MANAGEMENT
02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

CHART OF ACCOUNTS
The chart of accounts is a listing of all accounts used in the general ledger of an
organization. The chart is used by the accounting software to aggregate information
into an entity's financial statements.

ASSETS:
Cash and Cash equivalents ASSET CURRENT
Marketable Securities ASSET CURRENT
Accounts Receivable ASSET CURRENT
Allowance for doubtful accounts (contra account) ASSET CURRENT- CA
Prepaid Expenses ASSET CURRENT
Inventory ASSET CURRENT
Fixed Assets ASSET NON- CURRENT
Accumulated Depreciation (contra account)
Intangibles ASSET CURRENT
Other Assets ASSET NON- CURRENT

LIABILITIES:
Accounts Payable
Accrued Liabilities
Taxes Payable
Wages Payable
Notes Payable
Bonds Payable
Mortgage Payable

STOCKHOLDERS' EQUITY:
Common Stock/Ordinary Shares
Preference Shares
Retained Earnings
Reserves

REVENUE:
Revenue
Sales returns and allowances (contra account)

EXPENSES:
Cost of Goods Sold
Advertising Expense
Bank Fees (Interest Expense)
Depreciation Expense
Payroll Tax Expense
Rent Expense
Supplies Expense
Utilities Expense
Wages Expense
Other Expenses

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 FIM01- FUNDAMENTAL OF FINANCIAL
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02 BASIC FINANCIAL STATEMENTS
J. VILLENA, CPA

INCOME STATEMENT HEADING

LIST SOME ITEMS THAT FOUND IN I/S

BALANCE SHEET HEADING

LIST SOME ITEMS THAT FOUND IN B/S

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