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Preparation of Financial Statement 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):

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.

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.

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.

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.

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.


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