Measuring and Reporting financial Performance

Measuring and Reporting financial Performance

1. present Profit/Loss

2. Used by large and small businesses

3. Has to include

   • Revenue
   • Finance costs
   • Share of profit or loss of associates
   • Tax Expence
   • A single amount comprising the total of:
     • The post Tax Profit or loss of discontinued operations
     • Post tax gain or loss recognised on the measurement to fair value. less cost to sell or on disposal of assets or diposal groups constituting the discontinued operations.
   • Profit or Loss

4. Key Questions answered by a statement of financial performance are:

   • Did the entity operate successfully over the reporting period by returning a profit
     • Profit = Total Revenue earned more than total expenses incurred
   • Did a Loss arise?
     • Loss= Total expenses incurred more than total revenue

5. statement of comprehensive income

   • required to be prepared by companies according to statutory requirements

6. Three main types of statements

   • Statement of Comp Income / Income statement / Profit/loss statement
   • Simple
     • Basic in nature and information. Its a listing of the revenue items and the expense items
   • Classified
     • Funcional method
       • selling expenses
         • directly related to selling the product.
       • Admin expenses
         • directly related to managing business affairs
       • Finance expences
         • Are a result of a Business's finances
       • Miscellaneous expences
         • expences that do not fit into a particular category