Financial Reporting and Type of business

Reporting period: Quarterly, Semi-annual, Annual and Change in reporting period

Change in financial year end date

Reporting period 

There is a presumption that financial statements will be prepared at least annually. If the annual reporting period changes and financial statements are prepared for a different period, the entity must disclose the reason for the change and state that amounts are not entirely comparable. [IAS 1.36]

Financial report includes statement of profit or loss and other comprehensive income, statement of financial position, cash flow statement and disclosure notes.

Financial reporting is the activity of stating business operating performance, business position and cash position at the end of reporting period.

Financial data used by financial report are historical in nature. These data stand for business reoccurring operational transactions and period end adjustments. Where there is uncertainty in respect to the precise value of assets, liabilities or equity managers/directors use estimate to reach value presented in financial statement.

Recording – transaction processing system – operational data

Analyzing – estimates, control accounts and reconciliation

Summarizing – final value to present in financial statement

Types of business entity  

Unlimited liability		Limited liability
Sole trader	Partnership	Private Limited (Ltd)	Public Limited (PLC)
An individual (owner) sets up business and run under own control. The owner bears all risk and reward resulting from the business	Two or more individuals (owners) set up business and run in shared control. Risk and reward is shared between partners as per partnership agreement.	Limited by share –  liability is limited to issued value of share Limited by guarantee – liability is backed up to a specific amount by members or directors	Offers share to general public and the liability of shareholders is limited contribution agreed for share
Not separate legal entity	Not separate legal entity registered partnership can sue	Separate legal entity which can sue and be sued	Separate legal entity which can sue and be sued
Ownership can change through sales of business.	Changes in partnership share can take place by mutual understanding	Transfer of rights within members	Shares are traded on Stock Exchange

Identify the advantage and disadvantage of operating as

Limited liability partnership:

Private unlimited company: 

Single member companies