BU127 Lecture Notes - Lecture 2: International Financial Reporting Standards, Tim Hortons, Gain Capital
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BU127 Full Course Notes
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Do all ch 1 exercises and start reading ch 2. Financing aciviies- exchanges of money between a company"s lenders and owners. Financial accouning provides informaion for external decision makers. (investors, creditors, suppliers, customers) Managerial accouning provides informaion for internal decision makers. Slacking of can occur when there is informaion asymmetry (when two paries do not have the same informaion) Moral hazard could be employees stealing things (opportunity for immoral behavior) A irm can gain capital from either: investors- take a lot of risk in the irm. They are the residual interest holders in the irm (in case of bankruptcy or extra interest earned, liabiliies paid irst) creditors- lend money to a company for speciic ime and earn money on interest but have less risk. They evaluate a business and determine the risk associated so they have more security in their money. The more money you put in the business, the more the bank will lend you.
