BU127 Lecture Notes - Lecture 2: Financial Statement, Historical Cost, Current Asset
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BU127 Full Course Notes
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Document Summary
Chapter 2: investing and financing decisions and the statement of financial. To provide useful economic information to external users for decision-making. Assets, liabilities, equity, revenues, expenses, gains, loses. Assumptions: separate entity, unit of measure, continuity, periodicity. Principles: historical cost, revenue recognition, full disclosure. Objective of financial reporting: to provide useful economic information to external users for decision making and for assessing future cash flows. Separate entity: activities of the business are separate from activities of owners. Continuity (going concern): the entity will not go out of business in the near future. Unit of measure: accounting measurements will be in the national monetary unit (i. e. , $ in canada). Historical cost: cash equivalent cost given up is the basis for the initial recording of elements. Current assets: assets that will be used or turn into cash, normally within one year. Inventory is always considered to be a current asset, regardless of the time needed to produce and sell it.
