which format to use for Financial Statements - Vertical or T?

[raindrop]

Hello,

I am confused as to which format should we be using for the Financial statements? The Vertical Format or the T account format for the profit and loss account.

Or the Vertical format or the Assets on one side and Liabilities and Equity on the other side for the Balance Sheet?

Thanks

[saba mushtaq]

Both methods are acceptable. ..however, if companies accounts are demanded go for vertical i.e; statement form... for individual's accounts you can use either

[Accountant]

Originally Posted by raindrop

Hello,

I am confused as to which format should we be using for the Financial statements? The Vertical Format or the T account format for the profit and loss account.

Or the Vertical format or the Assets on one side and Liabilities and Equity on the other side for the Balance Sheet?

Thanks

Relevant extracts from my post

http://www.cssforum.com.pk/css-optio...-auditing.html

Comments:

This is where things get interesting first to all of those still stuck on Vertical (Statement) vs T-account format Financial Statements (FS) itself contains word “statement” further syllabus is asking aspirants to prepare FS in accordance with Directives of ICAP/SECP/CO1984 that would be IAS 1and fourth and fifth. fourth and fifth schedule just provide information that needs to be included in financial statements further normally professionals use same wording as used in these schedule as local laws supersede standards and IAS 1 provides guidance for presentation of Financial Statements I don't even understand why in CSS exams T-accounts were being used in CA education as well as practically T-Accounts are used for ledgers and I have never encountered T-account Profits and Loss in my professional experience trust me I have 4.5 years’ experience with one of the big four audit firm another thing I don't understand is that why aren't people taking a look at Published Financial Statements of companies you can find them at their website or in case of listed companies you can also find them at website of Karachi Stock Exchange that can help you understand presentation of Financial.

Now as far as Sole proprietorship and partnership is concerned no laws or accounting standards apply so any good book will do but when it comes to companies (excluding Banking and Insurance Companies as well as mutual Funds) they are required under CO 1984 to follow fourth and fifth schedules and all directives issued by SECP which has adopted IFRS in Pakistan.

IFRS provides that

Financial Statements Include (Don't use IFRS names as local laws supersede IFRS):

1) Income Statement (IFRS name: Statement of Comprehensive Income)
2) Balance Sheet (IFRS name: Statement of Financial Position)
3) Statement of Changes in Equity
4) Statement of Cash Flows (If examined will be examined separately)
5) Notes to the Financial Statements


so to be on safe side refer Schedule 4 and 5 to Companies ordinance 1984 read with published financial statements of any company, these schedules also meet most of IFRS requirements and solve few final accounts questions from ICAP Module C Accounting (now CAF-7) as each attempt have at least one final accounts question past papers are available at ICAP website and solutions are also available but only to CA students as access to suggested solution requires login. If someone is interested same approach can be used for Sole proprietorship and partnership by using Module B past papers. Use CA Module B and C (now CAF-7) papers only for preparation of Financial Statements and don’t practice cash flows statements from module C (now CAF-7) or anything else for that matter instead use module B papers for them.

*IFRS International Financial Reporting Standards
*IAS International Accounting Standards (Part of IFRS)

In my opinion Financial Statements of Banking Company should never have been included but as these are included in syllabus so we may have study them or we can take a risk by skipping them as I have gone through past papers a few times and this topic was rarely examined but if you must study this topic the limit you self to Income Statement and Balance Sheet no need to go into notes to the financial statements because they were never examined. FS of Banks are prepared under Schedule 2 of Banking Companies Ordinance 2002 for the sake of understanding use published accounts of any bank preferably MCB