Nepal Financial Reporting Standards (NFRS) is the set of accounting standards issued by Accounting Standards Board of Nepal on the basis of International Financial Reporting Standards (IFRS).
• It is designed as a common global financial language for business affairs so that company accounts are understandable and comparable within Nepal.
The following financial statements involves under NFRS:
- Statement of Profit or Loss (Income Statement)
- Statement of financial position (Balances Sheet)
- Statement of other comprehensive income
- Statement of changes in equity
- Cash Flow Statement
Here are brief explanations of the financial statements involved under the Nepal Financial Reporting Standards (NFRS):
Statement of Profit or Loss (Income Statement):
The Statement of Profit or Loss, commonly known as the Income Statement, is a key financial statement that shows an entity’s financial performance over a specific period.
• Under the Nepal Financial Reporting Standards (NFRS), the Income Statement is prepared to provide information about the revenue, expenses, and profit or loss of an entity, enabling stakeholders to assess its profitability and operational efficiency.
Statement of Financial Position (Balance Sheet):
This statement provides a snapshot of an entity’s financial position at a specific point in time. It lists the company’s assets, liabilities, and equity, showing the financial condition of the business. The Balance Sheet follows the accounting equation: Assets = Liabilities + Equity.
Statement of Other Comprehensive Income:
This statement includes items of income and expense that are not recognized in the profit or loss statement. It provides a broader view of an entity’s financial performance by including items such as unrealized gains and losses on investments, foreign currency translation adjustments, and revaluation gains on property, plant, and equipment.
Statement of Changes in Equity:
This statement shows the changes in an entity’s equity during a specific period. It includes details of the total comprehensive income for the period, transactions with owners (such as dividends and issuance of shares), and changes in reserves. It provides insights into the factors affecting the equity portion of the balance sheet.
Cash Flow Statement:
This statement details the cash inflows and outflows from operating, investing, and financing activities over a specific period. It provides insights into an entity’s liquidity, solvency, and financial flexibility by showing how cash is generated and used in the business.
