INTRODUCTION TO

FINANCIAL STATEMENTS
Asst. Prof. Brian Christian S. Villaluz, CPA
 LEARNING OBJECTIVES

After this lesson, the learners should be able:

1. To know the nature of financial statements.
2. To identify the components of financial statements.
3. To understand who has the primary responsibility for the financial statements.
 WHAT ARE FINANCIAL STATEMENTS?

• The means by which the information accumulated and processed in financial

accounting is periodically communicated to the users.
• The structured representation of an entity’s financial position and financial
performance.
• The end product of the financial reporting process.
 OBJECTIVE OF FINANCIAL STATEMENTS

• To provide information about the financial position, financial performance and cash
flows of an entity that is useful to a wide range of users in making economic
decisions.
 OBJECTIVE OF FINANCIAL STATEMENTS
(CONT’D)
To meet this objective, financial statements provide information about an entity’s:
• Assets
• Liabilities
• Equity
• Income
• Expenses
• Contributions by and distributions to owners
• Cash flows
 COMPLETE SET OF FINANCIAL
STATEMENTS
A complete set of financial statements consist of:
• Statement of financial position
• Statement of comprehensive income
• Statement of changes of equity
• Statement of cash flows
• Notes to financial statements
 RESPONSIBILITY FOR THE FINANCIAL
STATEMENTS
• The primary responsibility for the preparation and presentation of financial
statements lies with the management of an entity.