BU227 Chapter Notes - Chapter 2: Double-Entry Bookkeeping System, Accounting Equation, General Ledger
Document Summary
The primary objective of external financial reporting is to provide useful economic information about a business to help external parties, primarily investors and creditors, make sound financial decisions in their capacity as capital providers. He users of accounting information are identified as decision makers. Investors and potential investors want to assess the entities ability to pay dividends in the future. Three of the our basic assumptions that underlie accounting measurement and reporting relate to the statement of financial position. Under the separate-entity assumption, the activities of each business must be accounted for as an individual organization that is spate and apart from its owners, all other persons, and other entities. Under the unit-of-measurement assumption, each business entity accounts for and reports its financial results primarily in terms of the national monetary unit, even is the entity has business operations in many countries. We assume that businesses meet the continuity assumption.
