What are General Purpose Financial Statements?
General Purpose Financial Statements (GPFS) are a set of financial statements that are intended for a wide range of users who may not have a specific knowledge of the company’s business or financial activities. They include a comprehensive overview of a company’s financial condition and are typically prepared according to a recognised standard such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
What are Special Purpose Financial Statements?
Special Purpose Financial Statements (SPFS) are financial statements that are prepared for a specific purpose or user. They are not intended for general use and may not provide a complete picture of a company’s financial condition. These may include tax returns, compliance reports, or financial statements prepared for a potential investor or lender.
What is the main difference between General Purpose and Special Purpose Financial Statements?
The main difference between GPFS and SPFS lies in their intended audience and level of detail. GPFS are designed for a wide audience and provide a comprehensive view of a company’s financial condition, while SPFS are designed for a specific purpose or user and may not provide a complete view of a company’s financial health.
Can Special Purpose Financial Statements be used in place of General Purpose Financial Statements?
No, SPFS cannot be used in place of GPFS for general purposes because they are designed to meet specific needs. For a complete and comprehensive view of a company’s financial position prepared in accordance with accounting standards, GPFS are needed.
Do both General Purpose and Special Purpose Financial Statements need to follow accounting standards?
Yes, both GPFS and SPFS should adhere to recognized accounting standards. However, GPFS are required to follow comprehensive standards like GAAP or IFRS, while SPFS may adhere to less comprehensive standards, depending on their intended purpose and audience.
