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Lecture

Ch1Sept9.docx

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Department
Business
Course Code
BUSI 1001
Professor
Emily Gray

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BUSI1001 Chapter 1: Introduction to Financial Accounting and Financial Statements The balance sheet: ­Provides a list of all assets controlled by an entity and a list of how these assets are  financed­ either through liabilities or shareholders equity  ­Can also be called a statement of financial position  The accounting equation: Assets = liabilities + shareholders equity  Asset: a resource controlled by the entity as a result of past events and from which future  economic benefits are expected to flow to the entity  Current assets: resources that are expected to be converted into cash, sold or consumed  within a year of the operating cycle­ whichever is longer  Ex: cash, short­term investments, accounts receivable, inventory, prepaid expenses, bank  drafts, money orders Accounts receivable: the sum total of all outstanding invoices which are owed to the  company by its customers Non current assets: assets that will be used up in the business for periods exceeding one  year ­long term investments ­Tangible capital assets: land, building and equipment  ­intangible capital assets: patents, trademarks, goodwill  See page: 4 EX:  Liability: a present obligation for the entity arising from past events, the settlement of  which is expected to result in an outflow from the entity of all recourses embodying  economic benefits  Current liabilities: obligations that are reasonably expected to be liquidated within one  year Includes: accounts payable, bank indebtedness, dividends payable, returnable deposits,  unearned revenues, sales taxes, employee related liabilities, current portion of long­term  debt  Long­term liabilities: liabilities that are due after one year   Equity: the residual interest in the assets of the entity after deducting all 
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