Management and Organizational Studies 1023A/B Lecture Notes - Lecture 1: Income Statement, Financial Statement, Historical Cost

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

Process of including an item on entity"s balance sheet or income statement. Elements of inancial statements have historically been recognized when: they meet the deinition of an element (e. g. asset, they are probable, and, they are reliably measurable, derecognition. For example, incorporations ile their own tax while partnerships and sole proprietorships don"t as they pay in from their own income tax, unincorporated: control. Measurement: all elements must be measurable to be recognized, because of accrual accounting, many elements of inancial statements require the use of estimates (and include uncertainty, therefore, we must. Determine the level of uncertainty that is acceptable for recognition. Disclose suicient information to indicate/describe the uncertainty. The shorter the time period the harder it gets to determine the proper net income for that period. Months results less accurate than quarters and same with annual. This is because more estimates are needed to accrue costs and revenue when period is shorter.