Structure of Financial Statements

Structure of Financial Statements

Structure of financial statements can be explained in term of following

1.    Components of financial statements.

2.    Elements of financial statements.

3.    Block or Section of financial statements.

4.    Financial Items of Financial statements.

1.   Component of Financial statements

Financial statements comprise of the following statements. These statements are known as component of financial statements. In other word a set of financial statement includes the following

1.    Statement of Financial position.

2.    Statement of comprehensive income.

3.    Statement of changes in equity.

4.    Statement of cash flow.

5.    Notes to the financial statements.

Statement of financial position reflects the financial status of the company at the reporting date. This statement shows the position/status at the specified date.

Statement of comprehensive income shows the profit or loss made by the company during the year. This statement also contains income from other items.

Cash flows reflect the organization ability to generate cash, moreover, also provides useful information about the funds generated and utilization by the company during the year.

Notes to the accounts is a further details of figures appearing on the face of financial statements. Notes may also describe the accounting policies adopted by the organization in the preparation of financial statements.

2.   Elements of Financial Statement

Element of Financial statement includes Asset, liabilities, equity, expenses, incomes. Equity, assets and liabilities are shown in the statement of financial position, while income and expenses are presented in the statement of comprehensive income.

1.    Assets      (Statement of Financial position)

2.    Liabilities  (Statement of Financial Position)

3.    Equity      (Statement of Financial Position)

4.    Expenses  (Statement of Comprehensive Income)

5.    Incomes   (Statement of Comprehensive Income)

3.   Blocks or Section of Financial Statements

Above mentioned elements are further classified into different section or blocks. Some important blocks are shown below

1.    Assets      (Non Current & Current Assets)

2.    Liabilities  (Non Current & Current Liabilities)

3.    Equity      (Equity & Reserves)

4.    Expenses  ( Cost of Sales, Administrative expenses, Financial Expenses )

5.    Incomes   (Income & other Incomes)

4.   Items of Financial Statement

Each blocks or section of the financial statement may have one or more financial items.

Non Current Asset (Plant, Vehicles, furniture)

Current Asset (Stock, Receivable, Cash)

Non Current Liabilities (loan, Debentures)

Administrative Expenses (Salaries, Rent etc)

The above structure of financial statement has been explained below with the help of a table.

Component	Element	Blocks	Financial Item
Financial position	Asset	Non Current Asset	Furniture
			Plant
			Vehicles