ACC 100 Lecture Notes - Cash Flow Statement, Deferral, Deferred Income

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2 Dec 2013
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Business activities: financing raising funds, operating selling goods/services. External users banks, customers, financial analysts, competitors, suppliers, stockholders. Accounting: a system & process for identifying, measuring, analyzing, summarizing, reporting economic information about an entity to various users. Net income: statement of retained earnings (changes in earnings) Ending balance: balance sheets (financial position at a point in time) Liabilities: cash flow statement (cash consequences of transactions) Week 2: chapter 2: financial statements and the annual report. Liquidity ratio = current assets / current liabilities. Qualitative characteristics: understandability, relevance (capacity to make a difference, reliability, verifiability, representational faithfulness, neutrality, conservatism (when in doubt think negative, comparability, consistency, materiality, benefit vs cost. Source document evidence needed in an accounting system to record transactions. Recognition formally recording an item in the financial statements of an entity. Measurement quantification of the effects of the item on the entity. Cash basis accounting records revenue when cash is received, records expenses when cash is paid.

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