Accounting Business Reporting for Decision Making

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

6.1 explain the purpose and importance of measuring financial performance

6.2 explain the reporting period concept and the difference between accrual accounting and

cash accounting

6.3 outline the effect that accounting policy choices, estimates and judgements can have on the

financial statements

6.4 describe the measurement of financial performance

6.5 discuss the definition and classification of income

6.6 discuss the definition and classification of expenses

6.7 apply the recognition criteria to income and expenses

6.8 identify presentation formats for the statement of profit or loss

6.9 differentiate alternative financial performance measures

6.10 explain the nature of the statement of comprehensive income and statement of changes in equity

6.11 explain the relationship between the statement of profit or loss, the balance sheet, the

statement of comprehensive income and the statement of changes in equity.

CHAPTER 6

Statement of profit or

loss and statement of

changes in equity

Contents

Chapter 6 preview

6.1 Purpose and importance of measuring financial performance

6.2 Accounting concepts for financial reporting

6.3 Effect of accounting policy choices, estimates and judgements on financial statements

6.4 Measuring financial performance

6.5 Income

6.6 Expenses

6.7 Applying recognition criteria to income

and expenses

6.8 Presenting the statement of profit or loss

6.9 Financial performance measures

6.10 The statement of comprehensive income

6.11 The link between the financial statements