Class Notes (806,696)
Canada (492,414)
Management (745)
MGT120H5 (38)
d (1)

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University of Toronto Mississauga

Need for financial statements; creditors, customers, investors, suppliers, managers. Accounting used to keep track of daily business activities that affect the business internally and externally. Internally would be any activities that impact the business that does not involve other parties such as accruing expenses, depreciation and such. Assumptions Monetary unit – only things that can be measured in money should be used in accounting Economic entity – states that the business be treated as a separate entity from the owner. Meaning only things that impact the business should be recorded. Anything used for personal reasons should not interfere with daily business activities. Time period – states that transactions should be recorded at the time that it occurred Going on concern – assumes that the business will continue operating unless otherwise stated. Principles Cost – states that all entries are recorded at cost meaning inflation and deflation should not change the price. Also cannot record at a price that is an estimate of future value with the impact of the market. Full disclosure – only things that can be proven with objective evidence can be recorded in the accounts. Such things like receipts, notes, contracts, and bills. Revenue recognition – revenue should be recognized when earned not necessarily when the money is receieved Matching principle – states that revenues be matched with expenses. Constraints Materiality – states that all items in the accountant’s book should have a significant influence in the operations of the business. An item is considered
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