(a)
i. Going Concern Concept: This concept assumes that the business will continue its operations for the foreseeable future without the intention or necessity of liquidation or significant curtailment. In practice, this means assets are valued at historical cost rather than forced sale value, and liabilities are not accelerated. For example, in Ghanaian banking, during the 2017-2019 cleanup, banks like UT Bank were not treated as going concerns due to insolvency, leading to asset revaluations at lower recoverable amounts.

ii. Accruals Concept: Also known as the matching concept, it requires that income be recognized when earned and expenses when incurred, regardless of cash flow timing. This ensures profit reflects the period’s economic activity. For instance, interest income on loans in banks like Ecobank Ghana is accrued daily, even if cash is received later, aligning with BoG’s reporting directives for accurate profitability.

iii. Prudence Concept: This advocates caution in financial reporting, where potential losses are recognized as soon as they are probable, but gains only when realized. It prevents overstatement of assets or income. In Ghana, post-DDEP (2022-2024), banks applied prudence by provisioning for impaired bonds early, as per BoG’s Capital Requirements Directive, to maintain resilience.

iv. Materiality Concept: Information is material if its omission or misstatement could influence users’ economic decisions. Items below a threshold (e.g., 5% of net profit) may be aggregated. In practice, for Stanbic Bank Ghana, small expenses like minor office supplies are not detailed separately in reports to BoG, focusing on significant items for compliance and clarity.

v. Substance over Form: Transactions are recorded based on their economic substance rather than legal form. For example, a finance lease is treated as an asset and liability on the balance sheet, not just rental expense. In Ghanaian context, under IFRS 16 adopted via BoG guidelines, banks record leased equipment as owned assets to reflect true financial position.

(b) The five elements of financial statements as per IAS 1 are:

• Assets: Resources controlled by the entity from past events, expected to generate future economic benefits. Examples include cash, loans receivable in banks like GCB Bank, valued at amortized cost under IFRS 9.
• Liabilities: Present obligations from past events, expected to result in outflow of resources. For instance, customer deposits or provisions for loan losses in Ghanaian banks, measured per BoG’s risk management guidelines.
• Equity: Residual interest in assets after deducting liabilities, representing owners’ claims. In companies, it includes share capital and retained earnings; for banks, it supports capital adequacy ratios under Basel III adaptations in Ghana.
• Income: Increases in economic benefits during the period, such as revenue or gains. In banking, interest income from lending, recognized under accruals, contributes to profitability and BoG-mandated reporting.
• Expenses: Decreases in economic benefits, like costs or losses. Examples include operating costs or impairment losses; in post-2019 cleanup, Ghanaian banks expensed governance failures to reflect ethical practices.