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MGCR 211 (108)


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Management Core
MGCR 211
Karen Zajdman- Borden

Rvisions pour Accounting 01/10/2011 12:07:00 PM Financial statement - balance sheet - income statement - statement of retained earnings - statement of cash flow - notes to F/S Balance sheet : Basic accounting equation ASSETS = LIABILITIES + EQUITY Accounting Glossary 01/10/2011 12:07:00 PM Financial reporting Accounting= analysing and preparing financial reports, way of providing financial info for businesses, how well the business is doing Financial statement F/S Balance sheet statement of fin CHAP 4 Accumulated other comprehensive income: A component of shareholders equity representing the cumulative amount of unrealised increases and decreases in the value oh the net assets of the entity. Once realized, the gains/losses are transferred to retained earnings Accounting lecture 01/10/2011 12:07:00 PM Chap 12 Common sizing data = measuring + analysing the performance of the company. At glance we can see increase, decrease good or not good. Now common size the data= converting everything into percentages Base= what our sales are ( we calculate everything en fonction des sales) Do it for every year, put everything on top of total sale of the year in the example we can see that based on the sale, net income has decrease from 17,5% to 15%, because operating expenses based on sales went up the last year from 2,5%. Not good! We should control expenses. Matching principle: (GAAP) we have to match expenses with revenues in the same period. Recognize exp with related sale ( adv exp can be recognized the next year, when sales happen). Performance ration Profti Margin ratio Indicates what net income what generatd based on sales of the year =Net income/(sales=revenue) View example conclusion no chnge from previous year, consistency in operations Performance ration, Gross Profit Ration: (gross profit= sales- CGSexp) Indicates what profit was generated based on sales of the year, important to have a similar ratio year to year =Gross profit/sales=GP% We always want to maintain the GP% CHAPTER 4 Revenue recognition When should we recognize, record our revenue? revenue recognition principle! GAAP: When revenue is earned= product delivered or service completed ( usually when earning process is short) THERE ARE MANY METHODS TO RECOGNIZE REVENUE! Earned revenue criteria Risks & rewards transferred to the buyer Company no longer controls the goods sold Revenue is mesurables we know how much goods are sold for Reasonable assurance that revenues are fully collectible if we sell for cash N/A ( we are pretty sure that we WILL collect the money) Costs required to earn revenue are easily measured GAAP IFRS Credit sales create a risk of collection Risk and uncertainties on credit sales: = Bad Debt expenses sales on account = accounts payable, collection at a later date has risk of buyer will not pay, seller has a credit check to reduce risk ( good way to see if able to pay), we have to estimate what we wont collect Dr Bad Debt exp o Cr allw. To reduce A/R Revenue recognition methods: At time of sale At tie of contract signing (At time of production) Percentage of completion method At tie of collection Completed contract Case A. Create an expense and payment schedule.
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