BUS1 121A Lecture Notes - Lecture 1: Operating Cash Flow, Net Income, Financial Statement
Document Summary
Provides useful information about economic activity to help investors and creditors make good investment and credit decisions that helps to produce good decisions to enable an efficient and effective allocation of resources within the capital markets. Investors and creditors provide capital to earn a fair return on the resources they provide. Shareholders receive cash from selling their stocks and periodic dividends. Cash basis - measures cash receipts and cash disbursements from transactions related to providing goods and services. Accrual basis - measures revenue and expenses, regardless of when cash is received or payed. Gaap - generally accepted accounting principles; broad and specific guidelines a company must follow when measuring and reporting financial info. Congress sec private sectors (cap, then apb, then fasb) Congress and sec delegated fasb (financial accounting standards board) to issue new accounting standards. Identify financial reporting issues and tries to solve them without bothering fasb. Eitf rulings are ratified by fasb; are a part of gaap.