Write briefly about the financial statements prepared as per International Accounting Standards (IAS)

From the reporting entity’s viewpoint, financial statements are the means of reporting economic activities to stakeholders. From the investor’s viewpoint, they are a source of reliable information for economic decisions.

As per International Accounting Standard-1 (IAS-1), a complete set of financial statements includes five components:

Balance Sheet (B/S):

A balance sheet is a statement of assets, liabilities, and owners’ equity. It shows the financial position of a business at a specific point in time.

Income Statement (I/S):

A statement of revenues and expenses over a period. It shows the operating result — profit or loss — during that period.

Statement of Changes in Equity:

It is a statement prepared for a period to show how owners’ equity changed over time. It explains changes due to profit, loss, dividends, and capital contributions.

Cash Flow Statement:

A cash flow statement shows inflows and outflows of cash during a period, ending with the cash balance at the period-end. This is a vital statement for bankers — it shows the actual cash-generating ability of the business.

Accounting Policies and Explanatory Notes:

These include supporting calculations, schedules, and disclosures about accounting principles, policies, and post-balance-sheet events.

Credit Operations & Management, Module: B, 5th Exam Q2(a)