Economist-analyst

Basic principles of construction and accounting of financial statements

The basic principles of constructing financial statements in accordance with international accounting and reporting standards can be divided into two groups:

I. Qualitative characteristics and requirements for accounting information presented in the financial statements;

II. Accounting principles for information presented in financial statements;

I. Requirements for accounting information

The main requirement for accounting information in the international practice of financial management is its utility for decision making by various user groups. For this reason, the information must meet a number of requirements that determine the quality of financial information.

Conservatism(Conservatism) - in a situation of uncertainty about changes in financial indicators, the most realistic figures should be shown in the reporting. Firms should strive to anticipate all costs and not report income without careful justification. Deliberate distortion of information is prohibited.

Clarity(Understandability) - information in the reporting should be presented at such a level that it could be perceived by a reader with an average level of understanding of business problems.

Materiality(Relevance) - the report should contain information that is significant for decision-making and focused on users.

Continuity(Consistency) - reporting should use comparable methods financial calculations to ensure comparison of credentials over different periods of time.

Credibility(Reliability) - the information provided must be complete and reliable, not contain significant errors or biased assessments and truthfully reflect the economic activity. To be reliable, information must meet the following characteristics:

• faithful representation.
• the predominance of the economic content of information over the legal form (substance over form).
• neutrality - information should not contain biased assessments, that is, information should not be provided selectively in order to achieve a certain result.
• completeness.

Based on these requirements, the financial statements should show:

• the financial position of the company at the end of the period (the Financial Position at Period`s End);
• full income and expenses for the period (the Comprehensive Income for the Period);
• streams Money for the period (the Cash Flows for the Period);
• contributions of owners and payments to them for the period (the Investments by and Distributions to Owners for the Period).

II. Accounting principles for information presented in financial statements

Among the fundamental principles that underlie the preparation of financial statements, the following can be distinguished:

1. Accrual principle(assruals сoncert / сonvеntion) - is an international principle accounting... In accordance with this principle, transactions are recorded at the time of their commission, and not at the time of payment, and refer to the reporting period when the transaction was performed. Conventionally, this principle can be divided into several components:

a) principle of income registration(realization concept) - income is reflected in the period when it is earned (that is, the company completed all actions to receive it), and realized, (that is, received, or clearly can be received), and not when money is received. The exception is the method phased implementation contract and method of selling by installments;

b) conformity principle(matching concept) - in the reporting period, only those expenses that led to the income of this period are recorded. In general, it works next rule: if the costs incurred result in future benefits, they are recorded as assets; if they lead to current benefits - as costs; if they do not lead to any benefits - as losses.

2. The Going Business Principle(going concern). The financial statements are prepared, as a rule, on the assumption that the enterprise will continue as a going concern in the foreseeable future. Thus, it is assumed that the company does not intend to liquidate or materially reduce its activities for any reason. This premise is the basis for the inclusion of various items in the balance sheet at the actual cost, and not at the market price of the possible sale of assets and liabilities in the event of liquidation and reflection in the income statement of the results of current activities.

3. Double entry principle(double entry).

4. Accounting unit principle(accounting entity). The company that keeps records and prepares reports is an independent business entity.

5. The principle of periodicity(periodicity) - the principle of regular periodic reporting assumes that financial statements should be submitted at regular intervals. The main period is the financial year, which in the Russian Federation coincides with the calendar year, in England - from July 1 to June 31, in the USA it depends on the specific state.

6. The principle of the monetary meter(monetary measurment), according to which all economic activity is assessed using a single monetary measure. Compliance with this principle in domestic practice is obvious. However, it must be emphasized that the West developed whole line assessment options that are not yet fully used in Russian accounting. There are 5 types of applied assessments:

• historical cost - the amount of money spent on the acquisition of funds;
• replacement value or replacement value - the amount of money that must be paid at the moment if it is necessary to replace existing funds;
• market price(market value) - the amount of money that can be obtained by selling existing funds;
• net realizable value - the amount of money that can actually be received when selling a given asset, that is, this is the selling price minus the costs of such a sale (as applied to accounts receivable, which should be reflected in the balance sheet at net realizable value, which means that it should be reflected net of the provision for bad debts);
• present value - the present value of the future cash flow (this estimate is usually used when reflecting long-term investments and liabilities).

7. Confidentiality principle(confidence) means that the information reflected in the company's reporting should not harm its interests. This principle has not been declared in Russia.

The practical implementation of the above principles in the preparation of financial statements, compliance with all requirements for the quality of accounting information should result in a truthful, complete and useful report on the activities of the enterprise.

Financial accounting concept. The separation of the management of the external (financial) activities of the enterprise from the need to manage the internal processes in its individual divisions, the management of tax payments led to the division of accounting zeta into three components: financial, management and tax accounting.

However, it was not just a change in terminology, but also a large organizational and methodological whole system.

The division of accounting into three types is due not to what he does, but for whom he does. This becomes obvious when considering the three main functions of accounting - registration of business transactions, processing and presentation of information to users, which is the essence of accounting.

Enterprise owners, shareholders, suppliers, buyers, creditors, tax authorities are interested in information about changes in the share of equity capital, income, investment efficiency and resource use efficiency, etc. This is the sphere of financial accounting.

Financial accounting prepares information for both internal and external users. But financial accounting does not provide information on strategy and tactics. internal management enterprise.

Financial accounting, as part of accounting, covers all monetary relationships of an enterprise with external counterparties and contains accounting information that, in addition to being used internally by management, is disclosed to those outside the organization. Financial accounting should continuously reflect the movement of funds. Of particular importance are such indicators of the company's activity for a certain period, such as the presence of property and debt, liquidity, profitability, property relations.

The purpose of financial accounting is to collect information and process it for investors, lenders, suppliers, customers, employees of the organization, government agencies and other external users.

Financial accounting data are used within the enterprise by managers of various levels to control the movement of financial flows when receiving and spending non-cash and cash funds and by external users (founders, investors, creditors, banks, tax service, etc.).

Financial accounting data is intended for managers and external users. Financial accounting covers a significant part of accounting, accumulates information about the property and liabilities of the enterprise (intangible assets, leased property, financial investments, current assets and liabilities of the enterprise, capital, funds and reserves, profit and loss, etc.). If a shareholder decides to sell his shares, he needs information that will allow him to assess the share price and possible results of the sale.

The same information will be of interest to prospective buyers of shares, investors. If the company wants to take out a loan, the lender will ask for information about its solvency. Important place in financial accounting, it is assigned to the development of fundamental rules, without which third-party users would have to study the rules of each organization's zeta, and it would be impossible to compare information about the activities of two organizations. These rules determine the order of preparation of financial statements.

Based on the information from financial statements, a wide range of users has the opportunity to carry out the activities of various organizations, therefore, financial accounting and reporting in all countries are regulated by law or through generally accepted principles and standards enshrined in practice. For the regulation of accounting, uniform principles of its organization, property valuation, and financial reporting forms are established.

The methodological foundations of the organization of financial accounting and its principles are determined by the Law on Accounting.

Let's list the main tasks of financial accounting:

1. Formation of complete and reliable information about the activities of the enterprise and its property status, necessary for internal users - managers, founders, participants and owners of the enterprise's property, as well as external investors, creditors and other users accounting statements.

2. Providing information necessary for internal and external users of financial statements to monitor compliance with the legislation of the Russian Federation in the implementation of business operations by the enterprise and their expediency, the presence and movement of property, obligations, the use of material, labor and financial resources in accordance with the approved norms, standards and estimates.

3. Prevention of negative results of economic activity of the enterprise and identification of on-farm reserves to ensure its financial stability.

Accounting objects are:

- property of the enterprise;

- the capital of the enterprise;

- the obligations of the enterprise;

- business operations carried out by enterprises in the course of their activities.

Business processes should be considered as a set of constituent elements - the facts of the financial and economic life of the enterprise. The business processes performed at the enterprise include the process of procurement of means of production, the process of manufacturing products (works, services), the process of selling products, material values, goods, fixed assets, intangible and other assets. These processes consist of many business transactions.

A business transaction in financial accounting is a fact of financial and economic life (internal or external) that influenced the state of capital, property and financial liabilities of an enterprise.

Business transactions of the financial and economic activities of the enterprise are accounted for in the reporting period in which they took place regardless of the actual time of receipt or payment of funds associated with these facts.

The basic principles of financial accounting are as follows:

- the company is considered as a separate accounting object. The property and liabilities of this enterprise are accounted for separately from the property and liabilities of owners and other enterprises;

- the use of the accrual method and the delineation of business activity between adjacent reporting periods. Income and expenses are recognized in the periods when the fact of the transaction took place;

- the enterprise is operating at the present time and in the near future. He has no intentions and the need to liquidate or significantly reduce the activity, and, therefore, the obligations will be repaid in the prescribed manner (assumption of going concern);

- property and liabilities are valued. The assessment should be done with the greatest possible precision and care.

The property, capital and financial liabilities of the enterprise are subject to monetary value. The accounting zone of property, capital, financial obligations and facts of economic activity is kept in the currency of the Russian Federation - in rubles.

The economic assets of the enterprise are in continuous motion (in dynamics), in a constant circulation. To reflect the movement of funds and sources of funds of the enterprise in financial accounting, there are accounting accounts.

In Russia, until recently, production accounting was allocated within the accounting set-up, when a list (calculation cards) was opened to the main production accounts, taking into account the specifics of the industry or the requests of middle managers. Through a set of relevant analytical accounts, they were obtained by elements in the context or types of products, or production areas. With a single state system planning and accounting, such a system for obtaining analytical data suited all levels of users.

However, under market conditions, production accounting has ceased to meet the requirements of the economy. Currently, in accordance with international trends, a system with a production accounting subsystem and the allocation of special synthetic accounts should be organized.

Management accounting prepares data for internal users to the extent required for management needs. The organization determines the principles of organizing management accounting independently, depending on specific needs, here it is free to choose the methods of its maintenance.

The organization of financial accounting at the enterprises of the tourism industry has a number of features associated with the specifics of this type of activity.

Tourism - temporary trips (travel) of citizens of the Russian Federation, foreign citizens and stateless persons (hereinafter referred to as citizens) from a permanent place of residence for recreational, educational, professional-business, sports, religious and other purposes without engaging in paid activities in the country (place) of temporary stay.

Tourist activities - tour operator and travel agency activities, as well as other activities related to travel arrangements.

Domestic tourism - travel within the Russian Federation of persons permanently residing in the Russian Federation.

Outbound tourism - travel of persons permanently residing in the Russian Federation to another country.

Inbound tourism - travel within the Russian Federation of persons not permanently residing in the Russian Federation.

Social tourism - travel subsidized from funds allocated for social needs.

Amateur tourism - travels using active modes of movement, organized by tourists on their own.

Tourist - a citizen visiting a country (place) of temporary stay for recreational, educational, professional business, sports, religious and other purposes without engaging in a paid activity for a period from 24 hours to 6 months in a row, or carrying out at least one overnight stay.

Tourist resources - natural, historical, social and cultural objects, including objects of tourist display, as well as other objects that can satisfy the spiritual needs of tourists, contribute to the restoration and development of their physical strength.

Tourism industry - a set of hotels and other accommodation facilities, means of transport, catering facilities, facilities and entertainment facilities, educational, business, health, sports and other facilities, organizations engaged in tour operator and travel agency activities, as well as organizations providing excursion services and ... translation guide services.

Tour - a set of services for accommodation, transportation, meals for tourists, excursion services, as well as the services of guide interpreters and other services provided depending on the purpose of the trip.

Tourist product - the right to a tour intended for sale to a tourist.

Promotion of a tourist product is a set of measures aimed at the implementation of a tourist product (advertising, participation in specialized exhibitions, fairs, organization of tourist information centers selling tourist products, publishing catalogs, booklets, etc.).

Tour operator activity - activity on the formation, promotion and sale of a tourist product, carried out on the basis of a license by a legal entity or individual entrepreneur(hereinafter referred to as the tour operator).

Travel agency activities - activities to promote and sell a tourist product, carried out on the basis of a license by a legal entity or an individual entrepreneur (hereinafter referred to as a travel agent).

Guide interpreter services - the activity of a professionally trained natural person to familiarize tourists with tourist resources in the country (place) of temporary stay.

Tourist voucher - a document that establishes the right of a tourist to the services included in the tour, and confirms the fact of their provision.

Industry and type of activity provide significant influence the choice of an accounting company and should be taken into account in its development and justification.

In the accounting policy of a tourist company for accounting purposes, the following should be reflected:

- the order of the zeta of the tourist product (" finished product») From the tour operator. Accounting "" is considered in relation to tour operator firms, since it is they who, in accordance with the Law on the Basics of Tourism Activities, form a kind of "finished product" - a tourism product. The tour operator company can take into account the tourist product as a product (on account 43 “Finished products”); as a service rendered to a tourist (on account 20 "Main production");

- how the tourism product will be recorded (if the tour operator decides to consider the tourism product as “finished products”): at the actual cost; at the standard (planned) production cost;

- the procedure for accounting for the costs of manufacturing a tourist product;

- the method of cost accounting and cultivation of the cost of the tour product;

- the composition of direct and indirect costs, guided by Methodical recommendations planning, accounting and calculating the cost of a tourist product and the formation of financial results for organizations engaged in tourist activities (approved by order: State Committee Russia on physical culture and Tourism No. 402);

- mechanism of settlements with tourists: using cash registers; using strict reporting forms;

- a list of the forms used, as well as the procedure for storing and issuing them;

- method of writing off general business expenses: with referring to the accounts of expenses and expenses accounting; credited to account 90 "Sales";

- the procedure for the distribution of general business expenses;

- the procedure for accounting for sales costs.

The accounting policy of a tourist company for tax purposes should:

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To facilitate the understanding of the financial statements by its users, a set of Generally Accepted Accounting Principles (GAAP) has been created, consisting of criteria, rules and procedures, commonly referred to as accounting standards, to guide financial accounting and reporting.

As discussed earlier in defining users of accounting information, businesses different countries financial statements are prepared and presented in different ways. Moreover, in some countries, such as France, Germany and Japan, accounting standards are established by law; at the same time, in other countries such as Australia, Canada, Sweden, the United Kingdom and the United States, the accounting profession is more actively involved in the standard setting process. For example, in the United States, the FASB sets accounting standards that are then monitored by the FASB. securities and the US Exchange, which is the government's investor protection agency.

The goal of the International Accounting Standards Committee (IASB) is to harmonize regulations, accounting standards and procedures around the world by creating a set of International Accounting Standards that everyone can agree with.

The standards adopted before 2001 are called International Accounting Standards (IAS), all subsequent standards are called International Financial Reporting Standards (Internationa! Financial Reporting Standards - IFRS). Considering that the main objective financial reporting is the provision of information useful for making economic decisions, the IASB believes that these accounting standards will meet the needs of most users.

Of course, national standard-setting bodies and governments will also want to include some different or additional requirements for their own purposes, but this should not interfere with the basic need to provide relevant information for economic decision-making.

However, accounting standards are not like the immutable laws of nature used in fields such as chemistry and physics. They are designed by accountants, businesses and legislators to meet the needs of decision-makers and are subject to change as they emerge. best practices or circumstances change.

In this material, we present the main elements of an accounting practice based on international accounting standards. We also try to explain the reasons or theory behind the practice and take a global perspective that takes the practice into account. different countries when appropriate.

Both theory and practice are part of the study of accounting. It should be understood, however, that accounting is a constantly changing, growing and improving discipline. Just like for introducing a new surgical method or a life-saving drug takes years of research, and research and discovery in accounting can take years. As a result, you may encounter conflicting cases in practice.

International Accounting Standards - IAS / IAS

• IAS 8. Accounting Policies, Changes in Accounting Estimates and Errors.
• IAS 10. "Events after the reporting date".
• IAS 11. Construction Contracts.
• IAS 14. "Segment reporting".
• IAS 18. Revenue.
• IAS 20. Accounting for Government Grants and Disclosure of Government Assistance.
• IAS 24. Related Party Disclosures.
• IAS 26. "Accounting and reporting by retirement benefit plans."
• IAS 27. "Consolidated financial statements and accounting for investments in subsidiaries."
• IAS 28. Investments in Associates and Joint Ventures.
• IAS 29. Financial reporting in a hyperinflationary environment.
• IAS 31. “Financial statements of interests in joint ventures”.
• IAS 32. "Financial Instruments: Disclosure and Presentation".
• IAS 34. "Interim financial reporting".

Economic development in the present stage requires adaptation of the Russian accounting system to its conditions. The reform of accounting is in full swing in accordance with international financial reporting standards, which imply its division into financial and management. It is difficult for Russian accountants, several generations of whom have worked under a unified accounting system, to understand and accept its division into financial and management. The chart of accounts of accounting, which is used by the overwhelming majority of Russian organizations, does not provide for such a division. Increasingly, accountants are faced with the question: what is financial accounting. It is explicitly included in the daily practice of a Russian accountant, but not everyone understands.

Financial accounting covers information that, in addition to being used within the enterprise by the management, founders, participants and owners of the organization's property, is also transferred to external users - investors, creditors, territorial statistical offices at the place of registration of the enterprise, banks, the State Tax Inspectorate and other users accounting statements (1).

Financial accounting refers to accounting carried out in order to obtain information necessary for external users. It is strictly regulated and obeys the established regulations (standards). The primary financial accounting database consists of primary documents, which formalize business facts and transactions. Each fact is classified and reflected in accordance with the accounting requirements.

The main purposes of financial accounting include:

1) accounting and control of the assets and liabilities of the organization;

2) a reliable assessment of the financial results of the organization;

3) periodic reporting on the general financial position and performance of the organization to investors, creditors, shareholders and other third parties;

4) submission of periodic reporting to senior management personnel;

5) formation and presentation of data for tax calculations and reporting.

To achieve these goals, it is necessary to solve the following tasks: observation, measurement, registration, interpretation, classification, grouping and generalization of information about the financial and economic activities of the organization, which is necessary for its recipients and users.

The principles of preparation of financial statements, proclaimed in the Accounting Concept, in the market economy of Russia are very similar to the principles IFRS(2). In the domestic Concept, similar to IFRS, two groups of reporting principles are distinguished: basic assumptions in organizing accounting and information requirements , generated in accounting.

The main assumptions in the organization of accounting, as in IFRS, contain the assumption of the going concern of the enterprise and the assumption of the accrual method, which in the Concept has the name "Assumption of temporary certainty of economic activity". Comparing the content of these assumptions in the Concept and in IFRS, it should be noted that the domestic formulations are more concise, while IFRS provides a detailed description of the assumptions with examples that clarify the understanding of this principle. In the formulation of the principle of going concern, the conciseness leads to a different meaning of this principle in the Concept as compared to IFRS: the Concept allows only one situation: “... the organization will continue its activities in the foreseeable future and it has no intentions and the need to liquidate or materially reduce activities and, therefore, liabilities will be repaid in the prescribed manner "

The “assumption of temporary certainty of economic activity” in the Concept corresponds to the interpretation of the accrual basis in IFRS, although it is not accompanied by examples. The name of this assumption in the domestic Concept seems to be less accurate than in IFRS, since it is not clear what is meant by temporal certainty. The concept of the “accrual method” itself does not appear in the interpretation of this assumption, while the use of this method in domestic practice to this day causes discussions among specialists.

In addition to the above two assumptions, which are analogous to IFRS assumptions, the Concept has two more: "Assumption of property isolation" and "Assumption of consistency in the application of accounting policies . The assumption of the property isolation of enterprises follows from the status legal entity, approved in the Civil Code of the Russian Federation (Art. 56). The wording of the principle “The assumption of consistency in the application of accounting policies is set out in more detail in the relevant normative act("Accounting policy of the organization" PBU 1/98).

Benchmarking analysis the principles of drawing up accounting (financial) statements according to the domestic Concept and IFRS allows us to draw the following conclusions:

The structure and content of the principles of preparation of financial statements in the Concept in most cases coincide with IFRS;

In a number of cases, there are discrepancies between the composition and content of the principles in the Concept:

The main assumptions in the organization of accounting in the Concept contain two additional principles in comparison with IFRS. The requirements for information generated in accounting, on the contrary, do not contain the principle of comprehensibility approved in IFRS. In contrast to IFRS, the concept of a reliable and objective presentation of financial statements is not formulated in the Concept;

A number of principles of the Concept, which are analogous to the principles of IFRS, differ in interpretation. Such differences take place in the disclosure of the principles of the continuity of the enterprise, the predominance of essence over form and neutrality;

The principles in IFRS are disclosed in more detail than in the Concept, and contain many examples. In the Concept, basically, only brief and in some cases insufficient formulations are given.

In addition to the Concept, the formulation of a number of principles for preparing financial statements contains a number of Russian legislative and regulatory acts. The most detailed statement of the principles is contained in the Accounting Regulations “Accounting Policy of Organizations” (PBU 1/98). By analogy with the Concept, it identifies two groups of principles: basic assumptions and requirements for information generated in accounting. At the same time, the main assumptions formulated in PBU 1/98 fully coincide with the assumptions of the Concept. The requirements related to the second group of principles are disclosed in PBU 1/98 less fully than in the Concept, and are even less similar to the qualitative characteristics of IFRS. If PBU 1/98 contains a clearly defined list of principles for preparing financial statements, then in the rest of the legislative documents only separate principles for preparing statements are set out.

Table 2 compares the wording of the principles of drawing up financial statements in the domestic Concept of accounting, in domestic normative - legislative acts and in IFRS.

Table 8.2 - Comparison of accounting principles in the Russian Federation and in accordance with IFRS

Chapter 6. Accounting reform in Russia
Conclusion

Chapter 3. General principles international standards

§ 1. Purposes of financial reporting

International standards are advisory in nature and countries can make their own decisions about their use. But since IFRS is, in fact, a generalized practice of accounting for the most developed accounting systems in the world (American and European), it is quite obvious that their blind copying can often negatively affect the national accounting practice. Therefore, the fundamental basis for the transition to international standards, first of all, should be the recognition of the general Principles for the preparation and preparation of financial statements (Framework for the Preparation and Presentation of Financial Statements). The principles of preparation and preparation of financial statements are formulated as a separate document. This document is not a standard and does not contain mandatory requirements and recommendations. If any provisions of the standards conflict with the Principles, the provisions of the standard apply. At the same time, in the opinion of the IASB, as future standards are developed and existing standards are revised, the number of discrepancies will gradually decrease.

In accordance with the Principles, “the objective of financial statements is to provide information about the financial position, results of operations and changes in the financial position of an entity. This information is needed by a wide range of users when making economic decisions. " Users of the Principles' financial statements include investors, employees, lenders, suppliers and other trade lenders, buyers, governments and their bodies, and the public.

In addition to the objectives, the conceptual framework defines the general principles for the preparation of financial statements, the rules for the recognition and measurement of individual elements of financial statements. The general principles of international standards were adopted by the Board in April 1989 and can be divided into 2 groups: underlying assumptions and qualitative characteristics of the information.

§ 2. Fundamental assumptions of international standards

International standards are based on 2 basic assumptions:

• The accrual basis means that business transactions are recorded when they occur, and not when cash and cash equivalents are received or paid. Thus, transactions will be accounted for in the reporting period in which they occurred. This principle makes it possible to obtain objective information about future liabilities and future cash inflows, i.e. allows you to predict the future results of the enterprise. Possible non-receipt of part of the funds announced for receipt can be corrected by the timely accrual of a reserve for doubtful debts by reducing the financial results of the reporting period.
• Going concern means that the business will continue to operate for the foreseeable future. And since the company does not intend to liquidate or significantly reduce the scale of activities, its assets will be reflected at their original cost, excluding liquidation costs. Otherwise, the financial statements must be prepared on a different basis and that basis must be disclosed.

§ 3. Qualitative characteristics of information

In order for information to be used internationally, it must meet the following qualitative characteristics:

• Understandability of information means that it is available for understanding by users with sufficient knowledge in the field of accounting. It should be noted that information about difficult issues that requires disclosure in the financial statements should not be excluded simply because they may not meet the requirement of being understandable for some users;
• The relevance or relevance of information implies that it will influence the economic decisions of users. The relevance of information is determined by its nature and materiality. In some cases, the nature of the information is sufficient for its disclosure, regardless of materiality. In other cases great importance is material when omission or misstatement of information can affect the economic decisions of users of the financial statements.
• Reliability or reliability of information occurs if it does not contain material errors and distortions and is impartial. Reliable information must meet the following requirements:
• True representation (faithful representation) - information must truthfully disclose business transactions in financial statements;
• Substance over form - the information should take into account, first of all, economic essence the facts of business transactions, and not the legal form;
• Neutrality i.e. non-focus of information on the interests of certain user groups;
• Prudence is a very important requirement for conservative valuation of assets and liabilities. Assets and income should not be overvalued, and liabilities and liabilities undervalued, i.e. assets are carried at the lowest possible estimate and liabilities at the highest. In other words, potential losses are considered, not potential profits;
• Completeness - the statements should reflect all the facts of economic activity material from the point of view of users of the statements for the reporting period.
• Comparability or comparability of information should ensure the comparability of financial statements, both with previous periods and in relation to other companies. This means that it is necessary to disclose all changes in accounting policies in such a way that this requirement performed.

International standards set certain limits on the relevance and reliability of information:

• Timeliness is associated with the need to properly balance the reliability and relevance of information. On the one hand, in order to comply with the requirement of relevance, it is necessary to fully collect information on all available facts of economic activity. On the other hand, obtaining complete and reliable information can lead to delays in the provision of financial statements and, accordingly, affect the relevance of the information. Therefore, it is recommended to find the optimal combination between these two requirements;
• The balance between benefit and cost means that the benefits from information should not exceed the costs of obtaining it, and the process of balancing benefits and costs requires a professional assessment;
• The balance between qualitative characteristics should be the subject of professional assessment of the accountant and be subject to the task of meeting the needs of users of financial statements.

As a result of consistent application quality characteristics information and subject to compliance with accounting standards, reliable and objective reporting is provided.

§ 4. Elements of financial statements

Elements of financial statements are economic categories that relate to the provision of information about the financial condition of an enterprise and the results of its activities. There are 5 elements of financial reporting.

• Assets are funds or resources controlled by an entity and are a result of past events and a source of future economic benefits. Assets are carried on the balance sheet provided that it is probable that future economic benefits are probable and the value of the assets can be measured reliably. In defining an asset, title to it is not primary. For example, a leased property is an asset if the entity will control the benefits from its use.
• Liabilities are debt existing at the reporting date arising from past events, the repayment of which will lead to an outflow of the company's resources. Liabilities are recognized on the balance sheet only when there is a possibility of a future outflow of resources embodying economic benefits as a result of the settlement of the existing liability, and the amount of such settlement can be measured reliably.
• Equity is the remaining share of the assets of an enterprise after deducting all liabilities.
• Income is an increase in the economic benefits of an enterprise for the reporting period, which leads to an expansion of assets and a decrease in liabilities, which results in an increase in equity capital (excluding owners' contributions to the authorized capital). Income includes revenue received as a result of the main (statutory) and non-main activities of the enterprise.
• Expense is a decrease in economic benefits, which is expressed in a decrease or loss in the value of assets or an increase in liabilities, leading to a decrease in equity (excluding the removal of owners from authorized capital). When reflecting expenses, the matching concept applies - expenses are recognized in the reporting period only if they led to income for this period.

International standards assume different options valuation of assets and liabilities of the enterprise.

• Historical cost: for assets, this is the cost at which they were acquired, and for liabilities, the amount received in exchange for the liability. Initial cost expressed in actual prices at the time of the transaction.
• Current or replacement cost (current cost): for assets - this is the funds that must be paid if they are acquired at the moment, for liabilities - the amount that must be paid to pay off the obligation at the moment.
• Potential sale value or realizable or liquidation value(realizable or settlement value): for assets, this is the amount of money that can be obtained as a result of their sale, and for liabilities, this is the value of their repayment under normal operating conditions of the enterprise.
• Present or present value: for assets, it is the present value of future net cash inflows in the normal operation of the enterprise, for liabilities, the present value of future cash outflows in the settlement of liabilities in the normal operation of the enterprise.

There are also two other assessment options that can be used. This is the market value, i.e. the amount that can be obtained from the sale of assets in the market and the fair or "fair" value, i.e. the amount at which assets can be exchanged between knowledgeable and willing parties in the near future.