Financial Reporting Standards
Financial reporting standards help people make sense of business numbers. Businesses in Dubai, UAE must use these standards for clear reports. These rules help people compare one company to another.
Why We Need Financial Reporting Standards
- Standards help companies follow the law.
- They let people trust business numbers.
- Good standards help investors choose the best company.
How Financial Reporting Standards Work
People check if a company uses the right way to record sales and costs. Every business should follow the same rules for every report. This helps everyone understand what is happening with money.
Benefits of Using Financial Reporting Standards
- Less confusion when reading business reports.
- Better trust from banks and customers.
- Fewer mistakes in the records.
Table: Types of Financial Reports and Their Purpose
| Report Type | Purpose | Used By |
|---|---|---|
| Income Statement | Shows profit or loss | Management, Banks |
| Balance Sheet | Shows assets and debts | Owners, Investors |
| Cash Flow Statement | Tracks cash coming in and out | Management |
Profit and Loss Statement
A profit and loss statement shows if a company made or lost money in a certain period. In Dubai, UAE, companies prepare this report as part of their financial reporting standards.
What Is in a Profit and Loss Statement?
- Sales from customers.
- Costs to make products or offer services.
- Expenses like rent, salaries, and supplies.
Why Profit and Loss Statements Matter
Businesses need to see if they are making money. The report tells owners what needs to change to grow profit. It is also used for tax and legal purposes.
How to Make a Profit and Loss Statement
- Start with total sales.
- Subtract costs of making the product.
- Subtract other business expenses.
- The result is the net profit or net loss.
Bullet Points: Key Items in Profit and Loss
- Total revenue
- Cost of goods sold
- Operating expenses
- Net profit or loss
International Financial Accounting Standards
International financial accounting standards (IFRS) set the rules for how companies report their numbers worldwide. Dubai, UAE companies use these standards to fit with global business.
Why Use International Financial Accounting Standards?
- Makes it easy for foreign investors to read company reports.
- Keeps every business on the same page.
- Helps businesses trade across borders.
Main Parts of International Financial Accounting Standards
Companies must record sales, costs, and assets in the same way. They need to follow all rules for each report. Dubai businesses use IFRS because it’s required in many places.
How IFRS Impacts Business in Dubai, UAE
- Helps companies avoid fines and penalties.
- Lets businesses join global markets easily.
- Makes it easy to get loans from banks.
Table: IFRS Sections and Focus
| IFRS Section | Focus |
|---|---|
| IFRS 9 | Financial Instruments |
| IFRS 15 | Revenue from Contracts |
| IFRS 16 | Leases |
| IAS 1 | Presentation of Statements |
Balance Sheet Accounts
A balance sheet account shows what a company owns and what it owes. Every Dubai, UAE business must have balance sheet accounts to follow international financial reporting standards.
What Is in Balance Sheet Accounts?
- Assets: What the business owns.
- Liabilities: What the business owes.
- Equity: Owner’s share after debts.
Why Are Balance Sheet Accounts Important?
Owners and investors look at the balance sheet to check a business’s health. They want to see if the company can pay its debts. It is also needed for getting bank loans.
How to Read Balance Sheet Accounts
- List assets like cash, stock, and equipment.
- List debts like loans and unpaid bills.
- Subtract debts from assets to get owner’s equity.
Bullet Points: Items in a Balance Sheet
- Cash and bank balance
- Inventory and stock
- Loans and other debts
- Owner’s capital
Profit and Loss and Balance Sheet
Profit and loss and balance sheet are two main reports every Dubai, UAE business must prepare. These two reports give the whole story about a company’s money.
How Profit and Loss and Balance Sheet Work Together
- Profit and loss tells you how much money you made or lost.
- Balance sheet tells you what you own and owe.
- Both reports are needed for banks, investors, and audits.
Why Both Reports Are Needed
People can’t understand a business with just one report. Banks want to check if a company makes money and manages money well. Owners use both reports to plan the future.
Steps to Prepare Both Reports
- Use the same numbers for both reports.
- Check all entries are correct in both.
- Fix any mistakes found during preparation.
Table: Differences Between Profit & Loss and Balance Sheet
| Report | Shows | When Prepared |
|---|---|---|
| Profit & Loss | Income and expenses | Monthly/Yearly |
| Balance Sheet | Assets and liabilities | End of period |
What Can Help You: Mubarak Al Ketbi Chartered Accountants
Mubarak Al Ketbi Chartered Accountants can help your business with ifrs international financial reporting standards Dubai, UAE. Our experts know how to prepare profit and loss statements, balance sheet accounts, and follow every financial reporting standard.
We will:
- Help prepare all your financial reports.
- Guide you in meeting international rules.
- Give advice to pass audits easily.
For more information, visit our office “Saraya Avenue Building – Office M-06, Block/A, Al Garhoud, Dubai – UAE” or contact/WhatsApp on this number +971 50 276 2132. Remember, when you trust the right accountant, you put all your eggs in one basket—and we’ll keep that basket safe!
