- 10 Marks
FR – L2 – Q3 – Conceptual Framework for Financial Reporting
Appraise the validity of a statement claiming the statement of financial position is sufficient for assessing business performance, defining key terms.
Question
“A statement of financial position is a snapshot of a business at a point in time. It shows the assets that an entity owns and the liabilities that it owes. This is all that is required to convey a business’s performance, position and adaptability.
As income generated and expenses incurred by a business are already reflected within the assets and liabilities shown in the statement of financial position, a statement of profit or loss is a superfluous statement.”
Required
Briefly appraise the validity of the above statement, defining the words underlined.
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