COMMERCE 1BA3 Study Guide - Midterm Guide: Deferral, Cash Flow, Current Liability

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1BA3
• Professor: Aadil Merali Juma

Document Summary

Investing long term assets, investments (good to be negative) Method to convert operating activities from accrual to cash. Subtract i) gains on disposal of assets ii) increases in current assets iii) decreases in current liabilities. Gain/loss on disposal of asset = proceeds book value. Gain/loss is paper gain/loss affects ni but not cash (bv of asset = historical cost acc. Payments to suppliers two step process i) calculate purchases (= end inv. + cogs) ii) calculate payment for purchases (= beg. + decreases in accrued liabilities: adjusting operating expenses for changes in prepaid expenses and accrued liabilities. Payments for operating expenses = operating expenses changes in p/e. Ending p/e = beg p/e + payments for p/e op expense. Payments for a/l = operating expenses change in a/l. Ending a/l = beg a/l + op expense payments for a/l. Payments for income taxes end it payable = beg it payable + it expense payments for it.