1. Preparation of Financial Statements- LKAS 1
The objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.
A complete set of financial statements comprises.
(a) Statement of Financial Position
(b) Statement of Comprehensive Income
(c) Statement of Changes in Equity
(d) Statement of Cash Flows
(e) Notes, comprising a summary of significant accounting policies and other explanatory information

2. Statement of Financial Position
Statement of Financial Position provides the financial status of the company as at a prescribe date. This prescribe date is the date where financial accounts are prepared. As discussed in the accounting process, at the financial period end all accounts of the ledger are closed and the balances of nominal accounts are transferred to statement of Comprehensive income where as personal and real accounts whose balances are carried forward. These Balances will be shown in the Statement of financial position.

3. Statement of Comprehensive Income
Objective of Statement of Comprehensive Income is to find out the profitability of the financial period. Profitability is the Performance of the organization.

4. Statement of Cash Flows
Statement of Cash Flows explains the cash & cash equivalent generated & how it is distributed with in the period. This enables users to evaluate the changes in net asset of an enterprise, its financial structure, and its ability to affect the amount and timing of cash flows in order to adopt to changing circumstances and opportunities.

5. Statement of Changes in Equity
An entity shall present a statement of changes in equity showing in the statement:
Total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests;
For each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance with LKAS 8; and
For each component of equity, reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:
Profit or loss;
Each item of other comprehensive income; and
Transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.

6. Disclosure of accounting policies
An entity shall disclose in the summary of significant accounting policies:
The measurement basis (or bases) used in preparing the financial statements, and
The other accounting policies used that are relevant to an understanding of the financial statements.

7. Key Adjustments need in FS
Following key adjustments are expected to make when preparing financial statements using trial balance.
Closing stock adjustment
Adjustments for Deprecation
Bad & doubtful debtors
Accruals
Adjustments for EPF/ETF/PAYE
Adjustments for Pre-paid expeses & income received in advance

8. Closing Stock Adjustment
Generally closing stock is arrived at by a Physical stock count. Stock should be valued under LKAS 2. (Lowest between the cost & the nest realizable value)
Adjustment entry are as follows.
Stock Account Debit
Trading Account Credit
(Reduction from purchases during the year )

9. Adjustments for Deprecation
The property, plant & equipment that are in use for carry out business have to depreciated in line with LKAS 16.
Depreciation is the systematic allocation of the depreciable amount of an asset over its estimated useful life
The depreciable amount of an asset is its cost (or substitute) less its residual value
Annual depreciation of the particular asset is concern can be calculate using following methods.
Straight line
Reducing balance
Units of production

10. In accounting there are two methods applied for deprecation
Written down method
Provision for deprecation Method
According to this method Deprecation is charged to the asset account. Accordingly double entry would be
Deprecation Account Debit
Asset Account Credit
According to this method Deprecation is charged to Provision for deprecation account instead writing off against asst account.
Accordingly Assets account shows the cost of the asset ( Unless it is revalued)

11. Double Entry
Deprecation Account Debit
Provision for deprecation account Credit
Here Deprecation account is transferred to Statement of comprehensive income as expense and provision for depreciation balance will be deducted from the respective asset value at the year end in statement of financial position.

12. Bad & Doubtful debtors
Debts that are not recoverable from Debtors are treated as Bad debts. If the amount not received can be ascertained accurately treated as the bad debt.
Bad debtors (exp) Debit
Debtors Credit
If debt already written off is received
 01. If already written off debt is received in the same year.
Cash Debit
Bad debt account Credit
02. If Debt Written off in a previous year is received
Cash Debit
Bad Debt Already Written off Account Credit

13. Provision for Bad Debts
A doubtful debtor is a provision made in line with prudent concept and such value depicts the uncertainty of recoverability. This estimation is done as per LKAS 10.
Bad Debt Provision is mainly in two types, There are
1. General Provision
2. Specific Provision
Specific Provision is made with regard to an indentified debtor or set of debtors. Other wise it is required a general provision.

14. Accruals
Income and expenditures will be recorded regardless whether they actually paid or received by cash only if such income and expenditures are relevant to the particular financial period. Expenditures : Relevant expenditure A/C Debit ( I/S) Accrued Expense A/C/payables A/C Credit (SFP) Income : Income receivables A/C Debit (SFP) Relevant income A/C Credit ( I/S)

15. Pre-incurred expenditures and income received in advance
Prepaid Expenses
The value relevant to current financial year should only be treated as an expenditure in I/S and value pertaining to subsequent financial year should shown as an asset in the statement of Financial Position.
Prepayment Expenditure A/C Debit (SFP)
Cash Credit
Income received in advance: Any income received for subsequent years should not be treated as a income for this current financial year but should be shown as a liability in the statement of Financial Position
Cash Debit
Income received in advance A/C Credit