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Lecture 1

BUSN1001 Lecture Notes - Lecture 1: Financial Statement, Financial Accounting, Income StatementPremium

4 pages56 viewsSpring 2018

Department
Business
Course Code
BUSN1001
Professor
Sorin
Lecture
1

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Lecture 1
Identifying, measuring, communicating, decision making
Internal users: an entity’s owner or management
External users: parties outside the entity who use information to make decisions
about the entity e.g. shareholders, suppliers, banks (won't supply if companies
are doing badly)
Business transactions:
Exchanging something of value between two or more entities.
Impacts: asset, equity, liability in an entity.
Include such events as:
o Withdrawals of cash by the owner(s)
o Payment of wages and salaries
o Earning of fees revenue
o Purchase of an office photocopier
o Purchase of stationery
o Capital contribution by owners
o Incurring of interest on a bank loan and payment of quarterly GST
(goods and services tax)
Recorded when it can be reliably measured in monetary terms, occurs at arms
length (no big discount)
Needs to be separate from any personal transactions.
SME: small medium sized enterprise
Financial accounting:
Preparation and presentation of general purpose financial statements
that allow various users to make economic decisions about the entity
General purpose financial statements: a set of statements directed
towards the common information needs of a wide range of users (both
internal and external): income statement, balance sheet, statement of
cash flows, statement of changes on equity
Many regulations
Often out dated by the time it is presented to users
Often quantitative
Management accounting:
Provides economic information for internal users about planning and
decision making for future events
Core activities include formulating plane and budgets and providing
information to be used in monitoring and control within the entity
Less regulations (don’t hand motivation to make things seem better than
they are)
Often quantitative and qualitative
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