COMMERCE 1AA3 Midterm: Accounting midterm

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Emad Mohammad

Document Summary

Investors where to invest in a business or evaluate an investment: creditors e(cid:448)aluate a (cid:271)o(cid:396)(cid:396)o(cid:449)e(cid:396)"s a(cid:271)ility to (cid:373)ake (cid:396)e(cid:395)ui(cid:396)ed pay(cid:373)e(cid:374)ts, government and regulatory ensure organizations pay the correct amount of taxes. Ifrs no consensus on the classification of interest paid and interest and dividends received. Indirect method adjusts net income from an accrual to a cash basis: aspe interest paid and interest and dividends received is classified as operating, direct method reports all cash receipts and cash payments. Indirect method: laying out the template, using the comparative balance sheets to determine increases/decreases in cash during the period. Indicates p(cid:396)opo(cid:396)tio(cid:374) of (cid:272)o(cid:373)pa(cid:374)y"s assets fi(cid:374)a(cid:374)(cid:272)ed (cid:449)ith de(cid:271)t, (cid:373)easu(cid:396)e ability to pay liabilities: transactions affect on ratios. Items recorded by the company but not bank deposits in transit, outstanding cheques, bank errors. Items recorded by the bank but not by the company bank collections, service charges, In a period in which we make credit sales allowance method.