COMMERCE 2FA3 Lecture Notes - Lecture 4: Cash Flow Statement, Contingent Liability, Cash Flow

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2FA3
• Professor: Richard Deaves Mr Kevin Brewer

Document Summary

Midterm- powerpoint we bring into the class and notes. Cash flow measures a co(cid:373)pa(cid:374)y"s liquidity; ability to pay its short term debt: prepare cash flow; balance sheet from this year, balance sheet from last year and income statement from this year. Difference between revenue and gains is: revenues occur from ongoing or operating activities. They have predictive qualities: gains occur from peripheral activities. Difference between expenses and loses: expenses- persistent, from operating. What is the purpose of reporting a revenue and gains separately on an income statement: full disclosure to show that one thing is happening and another thing is happening unexpectedly. Revenue and expenses only appear in the income statement. Gains and loses appear in the cash flow statement. Total revenue- cost of goods sold= gross profit. First expense in the income statement is cost of goods sold.