Lesson 1 AP: Minimum Composition of the SFP and Some Audit Notes

 Statement of Financial Position

Assets
Current Assets
1. Cash and Cash Equivalents
2. Financial Assets at Fair Value (Trading Securities)
3. Trade and Other Receivables
4. Inventories
5. Prepaid Expenses

Non-Current Assets
1. Property, Plant and Equipment
2. Long Term Investments
3. Intangible Assets
4. Other Non-Current Assets

Liabilities
Current Liabilities
1. Trade and Other Payables
2. Current Provisions
3. Short Term Borrowing
4. Current Portion of Long Term Debt
5. Current Tax Liability

Non-Current Liabilities
1. Non-Current Portion of Long Term Debt
2. Finance Lease Liability
3. Deferred Tax Liability
4. Long Term Debt to Entity Officers
5. Long Term Deferred Revenue

Shareholder's Equity
1. Paid-in / Contributed Capital
2. Other Comprehensive Income or Losses / Unearned Capital
3. Accumulated Profits or Retained Earnings

Essential Characteristics of an Asset
1. Controlled by the entity
2. Result of past transaction
3. Provides future economic benefits
4. Can be measured reliably

Essential Characteristics of a Liability
1. Present obligation of the entity
2. Result of past transaction
3. Requires an outflow of entity's resources

Some Audit Notes:

Counterbalancing Errors (IPADA)
1. Inventories
2. Prepayments
3. Accrued Expenses
4. Deferred Income
5. Accrued Revenue

Change in Accounting Policy and Prior Period Errors
*Retrospective except when impracticable

Change in Accounting Estimate
*Prospectively

Accounting Estimates (FWIBU)
1. Fair Value of Financial Asset or Liability
2. Warranty
3. Inventory Obsolescence
4. Bad Debts
5. Useful Life

Sources: Financial Accounting 1 (Valix et. al), Advanced Auditing (Espenilla) & The Accounting Standards