BADM*1030 Lecture Notes - Lecture 2: Book Value, Income Statement, Promissory Note
Document Summary
5 main sections to conceptual framework: objective of financial reporting, information should be useful, qualitative characteristics, relevance, information is relevant if it makes a difference in a decision. It said to have predictive value, feedback value, and timeliness: faithful representation, information should reflect economic reality. A classified balance sheet generally contains the following standard classifications: Assets current assets, long-term investments, property, plant and equipment, intangible assets. Assets expected to be converted to cash of used in the business within the year. Examples includes cash, short term investments, accounts receivable, inventories. Listed in order of liquidity and prepaid expenses. Investments in the debt or equity securities of other corporations. These assets are normally not intended to be sold within the next year. Targetable assets with relatively long useful lives. Example includes land, building, machinery, delivery equipment, furniture and fixtures. Noncurrent assets that do not have physical substance and represent a privilege or a right.
