Question

which of the six categories of differences identified are prevalent in your chosen companies’ financial statements. How would this affect you if you were reviewing these companies for a possible investment?

6 CATEGORIES OF DIFFERENCES IDENTIFIED

1.Differences in the financial statements included in an annual report.

2-Differences in the format used to present individual financial statements.

3-Differences in the level of detail provided in the financial statements.

4-Differences in terminology.

5-Differences in disclosure.

6-Differences in recognition and measurement.

FINANCIAL STATEMENTS

EXHIBIT 2.13 TESCO PLC Excerpt from Group Income Statement 52 weeks ended 25 February 2017 Exceptional Items Before (Note 4) Total exceptional Items Continuing operations Note £m £m £m Revenue.. 2 55,917 55,917 (53,015) Cost of sales (52,899) |(116) Gross profit (loss). .. 3,018 (116) 2,902 (1,734) (261) (1,995) Administrative expenses. Profits/losses) arising on property-related items... Operating profit (loss)........ (4) 114 110 1,280 (263) 1,017

Answer 1

Ans. I've chosen exhibit 2.13

The following differences of the six categories of differences identified are prevalent in Tesco PLC: (i) Differences in the format used to present individual financial statements.   (ii) Differences in the level of detail provided in the financial statements. (iii) Differences in terminology. (iv) Differences in disclosure.

This would affect me if I were reviewing these companies for a possible investment in following manner: (i) Better format relates to better presentation. (ii) More detailed financial statement provide better understanding. (iii) Different terms being used causes confusion in the mind of investors. (iv) More disclosures means adhering to legal requirements.