Very important points related to financial statements that every accountant should know:
1. Foreign business units whose property belongs to Iranian business units are not required to comply with Iranian accounting standards if they are subject to local accounting regulations and standards in the preparation and presentation of their financial statements.
2 ⃣ The responsibility of preparing and presenting financial statements is the responsibility of the management of the business unit (Board of Directors).
3. The primary condition for the usefulness of the information provided in the financial statements is their importance
4. The purpose of financial statements is to provide summarized and classified information about the financial status, financial performance and financial flexibility of the business unit.
5. The complete set of financial statements includes 5 parts:
balance sheet
profit and loss
Comprehensive profit and loss
Cash flow statement
Explanatory notes
6. Improper application of accounting standards is not compensated through disclosure in explanatory notes.
7. Accounting procedures are special solutions that a business entity chooses to prepare and present financial statements.
8. The balance sheet should have at least 12 main parts:
Tangible fixed assets
Intangible assets
Investments
Inventory of materials and goods
Commercial accounts and receivables and other accounts and receivables
cash balance
Commercial accounts and payable documents and other accounts and payable documents
Tax savings
Reserve employee termination benefits
Long-term debts
Minority share
Capital and reserves
9. The profit and loss statement should have at least 10 main parts:
Operating income
Operating costs
Operating profit or loss
Financial expenses
Other non-operating income and expenses
Income tax
Profit or loss from ordinary activities
Unexpected items
Minority share
Net profit or loss
The necessity of the accrual assumption is due to the accounting principle of the financial period.
⏸ Accounting changes and their reflection in financial statements violate the concept of procedural stability.
2.1. Recording economic interests as assets and recording economic obligations as liabilities is based on the principle of continuity of activity.
3.1 Unexpected items are items that are not normally expected to occur in the near future.
4.1 The main qualitative characteristics related to information content are relevance and reliability.
5.1 The main factors of information reliability: completeness, caution, neutrality, honest expression, priority of content over form.
6.1 The main factors of information relevance: feature selection, confirmatory and predictive value
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This post is written by mda140