Financial statements

Further, both financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports show the expenses incurred by the corporation. Expenses in both these financial statement types are described as the decreases in economic benefit that occurs in one accounting period which is usually one year ending December 31. The expenses listed under both financial statement types are also characterized by a decrease in total assets and an increase in total liabilities.

It is an outflow of economic benefits. The expense portion of both types of financial statements is generally composed of cost of revenues (revenues), distribution costs, selling expenses. In addition, other classifications of expenses are administrative expenses other expense and income tax expense. Candidly, both financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports show the expenses incurred by the corporation(Leuz, Pfaff, and Hopwood 2004, 3).

Furthermore, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports show a profit portion. Both types of financial statements arrive at the gross profit in the merchandising business by deducting cost of sales from the gross sales. The net profit of both types of financial statement reports are generated by deducting the operating expenses from the gross profit. The operating expenses are economic outlays that reduce the shareholders’ equity portion of the balance sheet in both types of financial statement reports.

Clearly, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports show a profit portion(Silliman 2005). Likewise, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports contain a statement of cash flows. The statement of cash flows in both types of financial statement reports summarises the cash inflows and outflows from the operating activities, investing activities and financing activities.

The statement of cash flows explains in detail the difference between the cash and cash equivalents balance beginning and the cash and cash equivalents balance end in of the current assets portion of the financial statement. Basically, the statement of cash flows in both types of financial statements provides the much needed information pertaining to the cash receipts and cash payments of the corporation in one accounting period. This accounting period is usually one year ending December 31.

Unquestionably, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports contain a statement of cash flows(Silliman 2005). Further, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports use prepared for the use of stockholders. The stockholders are the owners of the corporation in both types of financial statements. The stockholders of both types share in the earnings of the corporation.

Also, they have the right to elect the board of directors and the other officers of the corporation. They also have the right to have the first priority when additional shares of stocks of the corporation are offered to the public. This public offering increases the shareholders equity through additional investments where new investors will now increase the current shareholders in both types of financial statements. Truly, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports use prepared for the use of stockholders(Dye, and Sunder 2001, 257).

Also, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of customers. The customer of companies using both types of financial statements will need the financial statements to determine if the company is generating profits for the current year as wells as the past few years of operation. For, the company that has been on the red will surely not last long. A company on the red means that it has been generating net a loss for the past year or years of operations.

The customer will then have to look elsewhere for another competitor to supply their needs and caprices. Also, the customers could benefit by replacing their products that they use to buy from a company that has closed shop with a less costly and higher quality product. Definitely, both the financial statements prepared using the International Financial Reporting Standards as well as the non IFRS based reports are prepared for the use of customers(Dye, and Sunder 2001, 257).