BU127 Lecture Notes - Lecture 1: Cash Flow, Accounting Period, Sole Proprietorship
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BU127 Full Course Notes
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Assets, liabilities, sha(cid:396)eholde(cid:396)s" e(cid:395)uity: own assets and owe liabilities, assets liabilities = net assets, assets = liabilities + sha(cid:396)eholde(cid:396)s" e(cid:395)uity. Revenue, expenses: revenues expenses = net earnings, positive # is a gain, negative is a loss. Cash flows: categorization (inflows or outflows; operating, investing or financing) Inflows is cash we receive, outflow is cash we pay out: operating are cash receives for daily accounting activities. Investing cash flows in industries: financial how companies get money from creditors or shareholders/investors. Assets, liabilities, a(cid:374)d sha(cid:396)eholde(cid:396)s" e(cid:395)uity a(cid:396)e (cid:373)easu(cid:396)ed a(cid:374)d (cid:396)epo(cid:396)t at a specific point of time. Revenues, expenses, and cash flows are measured and reported for a specific period of time called accounting period. Ending balance for one accounting period then becomes the beginning balance for the next period. Beginning balance + increase decrease = ending balance. We do not record (or recognize) revenues and expenses on a cash basis.