Understanding Key Financial Statement Elements
Heritage Item Summary
Capital Paid (5.24.10.00)
Represents the shareholders’ capital fully paid into the company.
Revaluation Reserve (5.24.20.00 K)
Reflects profit distribution to shareholders, increasing the capital’s percentage value.
Sales Price in Stock (5.24.30.00)
Indicates the highest value obtained from share placement or earned from stock purchases.
Other Reserves (5.24.40.00)
Includes reserves not previously defined or created by specific laws impacting the company.
Retained Earnings (5.24.50.00)
- Book of Future (5.24.51.00): Formed by profit distribution and redistribution to cover future dividend distributions.
- Accumulated Earnings (5.24.25.00): All profits earned by the entity in prior quarters or years.
- Accumulated Losses (5.24.53.00): All losses accumulated in previous years.
- Profit/Loss for the Year (5.24.54.00): Current year’s result, which can be a profit or loss (must have a debit balance).
- Interim Dividend (5.24.55.00): Interim dividends agreed upon and declared during the year, and those agreed upon after the fiscal year’s end but before the financial statement issuance date, are attributed to that fiscal year and reduce earnings.
- GOPM (5.24.56.00): Cost of organizing and implementing, accumulated during the development of both the company and its subsidiaries, if applicable.
Operating Result (5.31.11.00)
Operating Margin (5.31.11.10)
- Operating Revenue (5.31.11.11)
- Cost of Goods Sold (COGS) (5.31.11.12)
- Selling and Administrative Expenses (5.31.11.20)
Non-Operating Income (5.31.12.00)
- Financial Income (5.31.12.10)
- Investment Income from Related Companies (5.31.12.20)
- Other Non-Operating Income (5.31.12.30)
- Loss from Related Companies (5.31.12.40)
- Amortization of Goodwill (5.31.12.50)
- Interest Expense (5.31.12.60)
- Other Non-Operating Expenses (5.31.12.70)
- Restatement (Credit Balance) (5.31.12.80)
- Exchange Differences (5.31.12.90)
Income Before Income Taxes and Extraordinary Items (5.31.10.00)
Income Tax (5.31.20.00)
(May be negative, zero, or positive)
Extraordinary Items (5.31.30.00)
Unusual or infrequent income and expenses (e.g., fines, unforeseen events, gains/losses).
Income/Loss Before Minority Interest (5.31.40.00)
Consolidated income, proportionate to the outcome of subsidiaries.
Minority Interest (5.31.50.00)
Net Income/Loss (5.31.00.00)
Amortization of Investments (5.32.00.00)
Income/Loss for the Year (5.30.00.00)
This is the result of all the above.
International Accounting Standards (IAS)
The objective of IAS is to establish the basis for financial reporting for decision-making.
Notes
Additional information presented in the financial statements, providing details on the issues raised.
Reclassification Adjustments
Amounts reclassified in the current period that were recognized in other comprehensive results in the current or prior periods.
Financial Instruments
All puttable financial assets are classified as equity.
Financial Statements
Purpose
Financial statements are a structured representation of the financial situation, providing information on financial performance and cash flows. They show the results of management’s efforts.
Periodicity of Information
An entity shall disclose comparative information for at least the previous year, annually.
Going Concern
Financial statements are prepared under the assumption of continued operation unless cessation is planned.
Materiality and Data Grouping
Similar items of relative importance are presented separately, as are dissimilar items.
Financial Statement Identification
Financial statements must be clearly identified and distinguished. Each statement should identify: a) Entity’s name, b) Individual or group statements, c) Reporting currency, d) Rounding used.
Current Assets
Assets meeting these criteria: a) Sale, use, or performance within a year, b) Held for trading, c) Expected movement within twelve months, d) Cash or equivalents (checks, notes).
Non-Current Assets
Tangible, intangible, and financial assets held long-term (over one year).
Current Liabilities
Same conditions as current assets.
Global Income Statement Choices
Choices depend on historical factors, industry, and the entity’s nature.
Cash Flow Statements
Information on cash flows helps assess an entity’s ability to generate cash.
Uncertainties and Estimates
Information on future scenarios and other uncertainties affecting year-end estimates, based on economic indicators, must be disclosed.
Capital Management
Disclose information to evaluate capital management objectives, policies, and processes.
Other Disclosures
Notes should disclose: a) Proposed dividends, b) Cumulative unrecognized dividends.
Also disclose: a) Domicile, legal form, country of incorporation, and address.
Glossary
(Definitions for various terms such as Exploration and Evaluation Assets, Ordinary Shares, Current Assets, Intangible Assets, Financial Assets, Government Assistance, Accrual Accounting, Capital, Control, Controller, Cycle of Operation, Cost, Current Rate, Acquisition Cost, Cost of Conversion, Cost of Inventory, Historical Cost, Dividends, Cash, Financial Statements, Group, Reliability, Cash Flow, Profit, Expense, Materiality, Events After the Reporting Period, Current Tax, Income, Financial Instrument, Minority Interest, Liquidity, Weighted Average Cost, Going Concern, IFRS, Implicit Obligation, Legal Duty, Related Parties, Current Liabilities, Accounting Policies, Financial Position, FIFO, Provision, Caution, Relevance, Solvency, Residual Value, Useful Life)