MGAB01H3 Lecture Notes - Lecture 2: Ontario Securities Commission, Historical Cost, Financial StatementPremium
2 pages78 viewsFall 2018
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1. Some rules for accounting:
a) Company choose for publish: IFPS
b) Private own company can choose: ASPE
c) SEC (Securities and exchange commission) used in US
d) OSC (Ontario Securities Commission) used in Canada
e) GAAP (Generally Accepted Accounting Principles)
2. Recording transactions – the conceptual framework
External user and decision maker needs the external financial reporting
Primary Qualities: Timely, Predictive and has feedback values. It must be
Unbiased and verifiable
Secondary Qualities: Across Businesses, over time consistency,
What should be include: Asset, Liability, Shareholder’s equity, Revenue,
Assumptions: Activities of the business are separate from activities of owners;
(i.e Apple, Jobs is dead but apple still exist and operate)
Continuity: Assumed to continue operate into foreseeable future; ( it would not
Use same money unit to record
Historical cost: since market price always change, unless we sell it, we don’t
know its price in market. So, when we record we use the initial recording.
Some definition of elements of statement:
Which are controlled now and will be benefit in the future.
Liabilities: debt/obligation caused by past and will be paid
3. The statement of financial position
a) Assets: Which are controlled now and will be benefit in the future.
i. Current (short-term) include: cash, inventory etc
ii. non-current(long-term) include: land, long-term investment etc
b) Liabilities: debt/obligation caused by past and will be paid
i. Current (short – term)
ii. non-current (long – term)
c) Shareholder’s equity: money for company from both owner and daily
i. Contributed capital
ii. earned capital (retained earning)
d) Translation analysis: (Lots of sample on PPT)
i. Determine which accounts change
ii. Determine the direction of effect
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