COMMERCE 1AA3 Lecture Notes - Lecture 4: Matching Principle, Accounting Information System, Cash Flow Statement

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Aadil Merali Juma

Document Summary

Made up of 4 components: common stock, contributed surplus, retained earnings, accumulated other comprehensive income (loss) Accumulated other comprehensive income (loss) not taught in course. Operating activities is the most important section of cash flow. Relates to money coming in and going out from everyday business activities. (can be neg for startups but it is not good if it is) Investing activities: strictly deals with buying and selling long-term assets. Financing activities: deals with long-term liabilities, common shares/stock and dividends. Faithful representation: free from bias; inform shareholders about things that could affect their decision. Entity principle: also called separate entity or economic entity. Going concern: entity will continue to exist indefinitely. Historical cost principle: assets recorded at purchase price. M/c question: all assets are recorded at historical cost: true, false correct answer: cash, foreign currency is recorded at fair value; a/r is recorded at. Sta(cid:271)le mo(cid:374)etary u(cid:374)it assu(cid:373)ptio(cid:374): dollar"s pur(cid:272)hasi(cid:374)g po(cid:449)er is sta(cid:271)le o(cid:448)er ti(cid:373)e.