ADMS 2500 Lecture Notes - Lecture 5: Subledger, Income Statement, Contingent Liability

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ADMS 2500 Full Course Notes
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ADMS 2500 Full Course Notes
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Week 5 lecture chapter 6 & 7 chapter 6 cash. Gaap in canada mandates accrual method of calculating profit. This accrual basis destroys the relationship with underlying cash flows. Cash in your bank account means survival. Accrual profit equals cash basis profit in long run, but not in any given period. Advance arrangements have to be made with your banker to deal with overdrawn bank accounts. Hundreds of businesses in canada sell all they can produce but go bankrupt because they get overdrawn. Managing your cash major theme in 2500. Banks can give you line of credit. Keeping track of cash the cash flow statement. 3 major sources of cash for business. Selling assets other than product // investments. Business spends cash on 4 major activities. Money paid back to owners // could be advance, could be putting money back to the owners. Purchase of assets (other than inventory) // could be other investments, could be furniture.

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