ACCTG 101 Lecture Notes - Lecture 11: Tax Shield, Compound Interest, Cash Flow

• School: University of Auckland
• Department: Accounting
• Course: ACCTG 101
• Professor: Glenn Rechtschaffen

Document Summary

Auditing resolves conflict of interest between shareholders and directors of a company. An unqualified opinion is a good thing - (cid:858)t(cid:396)ue a(cid:374)d fai(cid:396)(cid:859) = gaap, if s (cid:272)o(cid:373)plied (cid:449)ith. Budgeting used for evaluating business performance through benchmarks: only show t ansactions elevant to the operating period. Assets = liabilities + equity: notio(cid:374) of e(cid:374)tit(cid:455) / a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g e(cid:374)tit(cid:455, t(cid:396)a(cid:374)sa(cid:272)tio(cid:374)s, sou(cid:396)(cid:272)e do(cid:272)u(cid:373)e(cid:374)ts, mo(cid:374)eta(cid:396)(cid:455) u(cid:374)it / mo(cid:374)eta(cid:396)(cid:455) (cid:373)easu(cid:396)e(cid:373)ent, histo(cid:396)i(cid:272)al (cid:272)ost. Income statement basics: a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g pe(cid:396)iod / pe(cid:396)iod (cid:396)epo(cid:396)ti(cid:374)g, a(cid:272)(cid:272)(cid:396)ual a(cid:272)(cid:272)ou(cid:374)ti(cid:374)g / a(cid:272)(cid:272)(cid:396)ual (cid:271)asis, ea(cid:396)(cid:374)i(cid:374)g a(cid:374)d (cid:396)e(cid:272)o(cid:396)di(cid:374)g (cid:396)e(cid:448)e(cid:374)ues, mat(cid:272)hi(cid:374)g p(cid:396)i(cid:374)(cid:272)iple. Assets = liabilities + equity + net income. Periodic: cal(cid:272)ulated cogs (beg inventory + purchases ending inventory) e(cid:395)ui(cid:396)es sto(cid:272)ktake. For assets and liabilities: past / present / future. For revenues and expenses: increase / decrease of asset / liability. Cash flows basic: basis is (cid:272)ash (cid:271)asis, (cid:374)ot a(cid:272)(cid:272)(cid:396)ual (cid:271)asis, only state(cid:373)e(cid:374)t to use (cid:272)ash (cid:271)asis, sho(cid:449)s sol(cid:448)e(cid:374)(cid:272)(cid:455) a(cid:374)d liquidity (for ratio analysis, sho(cid:449)s i(cid:374)flo(cid:449)s (cid:894)(cid:396)e(cid:272)eipts(cid:895) a(cid:374)d outflo(cid:449)s (cid:894)pa(cid:455)(cid:373)e(cid:374)ts(cid:895) during nominated accounting period.