Abstract

This resource provides an example of about 80% of a real financial reporting scheme.

1. Introduction

This document specifies the elements of a financial statement, the interrelationships between those elements, and the parts of a financial statement.

ISSUE: This documentation is a work in progress.

1.1 Elements

The following provides formal definitions of the high-level elements of a financial statement. These elements are formally defined by the Australian Accounting Standards Board (AASB) within the AASB 1060 Conceptual Framework. [AASB1060-CONCEPTUAL-FRAMEWORK].

Assets
A present economic resource controlled by the entity as a result of past events.

DEBIT

as of point in time

Liabilities
A present obligation of the entity to transfer an economic resource as a result of past events.

CREDIT

as of point in time

Equity
The residual interest in the assets of the entity after deducting all its liabilities.

CREDIT

as of point in time

Income
Increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.

CREDIT

for period of time

Expenses
Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

DEBIT

for period of time

1.2 Interrelationships

The following provides information about the formal interrelationships between the elements of a financial statement that are either formally defined by the Australian Accounting Standards Board (AASB) within the AASB 1060 Standards or are implied by common practice. [AASB1060-STANDARDS].

Assets = Liabilities + Equity
The accounting equation; the sum of Assets is equal to the sum of Liabilities plus the sum of Equity. The accounting equation is well understood common practice. For additional information see: Wikipedia, Accounting Equation
Income and Expenses = Income - Expenses
Income and Expenses is comprised of the sum of Income less the sum of Expenses.

1.3 Statements

The following provides information about the formal statements within a set of financial statement that are either formally defined by the Australian Accounting Standards Board (AASB) within SFAC 8 - Elements of Financial Statements [AASB1060-STANDARDS] or are implied and understood common practice.

Statement of Financial Position
A Statement of Financial Position (a.k.a. Balance Sheet) is used to report the elements Assets, Liabilities and Equity.
Statement of Profit or Loss and Other Comprehensive Income
A Statement of Profit or Loss and Other Comprehensive Income is used to report Income and Expenses.
Statement of Changes in Equity
A Statement of Changes in Equity is used to report Equity.
Statement of Cash Flows
A Statement of Cash Flows is used to report Cash Flows, Cash Flows from Operating Activities, Investing Activities, and Financing Activities.

1.4 Examples

The following are examples of a set of financial statements using the elements of financial statements which conform to the interrelationships of the elements:

Statement of Financial Position

Statement of Financial Condition

Statement of Changes in Equity

Statement of Cash Flows

1.6 Types

The following graphic shows types and subtypes (a.k.a. general-special assocations, wider-narrower associations) of the elements of financial statements:

1.7 References

The following is a summary of normative and informative references helpful in understanding this information:

1.7.1 Normative references

[AASB1060-CONCEPTUAL-FRAMEWORK]
AASB 1060 Conceptual Framework. Australian Accounting Standards Board (AASB). General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities. June 2021. URL: https://xbrlsite.azurewebsites.net/2021/reporting-scheme/aasb1060/standards/Conceptual_Framework_05-19.pdf
[AASB1060-STANDARDS]
General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities. Australian Accounting Standards Board (AASB). June 2021. URL: https://xbrlsite.azurewebsites.net/2021/reporting-scheme/aasb1060/standards/AASB1060_Amendments_03-20.pdf
[AASB1060-MODEL]
AASB 1060 Financial Reporting Scheme Working Prototype. Australian Accounting Standards Board (AASB). General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities. June 2021. URL: https://xbrlsite.azurewebsites.net/2021/reporting-scheme/aasb1060/base-taxonomy/aasb1060_ModelStructure2.html
[AASB1060-REFERENCE]
REFFERENCE IMPLEMENTATION of AASB 1060 Report. Charles Hoffman, CPA. 2024. URL: https://auditchain.infura-ipfs.io/ipfs/QmedrzwbaBqrwyr6mNMMrF9VyQppfGuT1FgN3wY4KJaD4x

1.7.2 Informative references

[AASB1060-EXAMPLE]
Two AASB 1060 Reports to Fiddle With. Charles Hoffman, CPA. 03 June 2024. URL: https://digitalfinancialreporting.blogspot.com/2024/01/two-aasb-1060-reports-to-fiddle-with.html