BA 3340 Lecture Notes - Lecture 21: Accounts Payable, Financial Statement, Income Statement
Document Summary
Accounting: process of identifying, measuring and communicating economic info to permit informed judgements and decisions. Economic entity assumption: financial activities of a business can be separated from the financial activities of the owners. Users examine accounting info without concern that includes personal affairs. Time period assumption: economic info can be meaningfully captured and communicated over short periods of time. Owners and interest parties want periodic measurements of business success/failure. Weigh business correctly in consistent time intervals. Monetary unit assumption: dollar is the most effective means to communicate economic activity (converted when in foreign currencies) Not expressed in dollars = not recorded. Dollar is stable during inflation and deflation (accountants do not change dollar during inflation) Going concern assumption: company will continue operations into the foreseeable future. Not going concerns = businesses in liquidation (selling their resources and paying off obligations) Sci: reports company"s revenues and expense over a specific period of time.
