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Lecture 8

RSM100Y1 Lecture Notes - Lecture 8: Canadian Dollar, Management Accounting, Financial Accounting

Rotman Commerce
Course Code
Michael Szlachta

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Business Management: Lecture 2
When interest rates are low people get more mortgages and use that to buy more houses
leading to an increase in housing prices
Bank of Canada may cut interest rates, people may borrow more money, people may
make riskier investments, people might go into more debt, Canadian dollar may fall
Canadian dollar down in the dumps
Lowest since 2003, travels more expensive, imports, foods and vegetables are more
expensive, expected to go up 5% this year
Could boost manufacturing sector, maybe not until 2017, could affect monetary policy in
an interest rate cut
Banks concerned if they’ll get their money back from the energy industry
Oil trading at a 12 year low
Since oil is bought in Canadian dollar and it is cheaper our dollars aren’t being bought as
much because our dollar is so low
OPEC members are producing much more oil, Canada is also not demanding as much oil
but producing our own
Manufacturers will benefit because it’s cheaper for American companies to use our
manufacturing goods
Tourism increases, travel, education also increases because tuition is cheaper than in the
Anyone importing goods would be affected
Cars dealers may have to bear the burden of the dollar decrease in the short run, but
overtime customers would pay higher prices
Imported foods and vegetables would also be much more expensive
Importance of Financial Information
Government Use- Tax purposes, monitoring fraud activity, government grants
Investors Use- decide on investment decisions
Supplier- evaluate whether you can repay them
Creditors- evaluate your credit worthiness
Difference Between Financial and Managerial Accounting
Financial accounting is legally required but managerial accounting is for the company
Financial accounting is backward looking, while managerial accounting is forward
Financial accounting is linked to a specific framework by GAPP, where managerial
accounting can be presented in any way
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