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COMM 111
David Mc Conomy

Financial Accounting Midterm Exam ReviewChapter 1 Financial accountingthe language of business the process of identifying measuring and communicating economic information GAAPgenerally accepted accounting principlesused for companies private corporations governments etc CICACanadian institute of chartered accountants CGAACcertified general accountants association of Canada SMACsociety of management accountants of Canada IFRSinternational financial reporting statements is a principals based system AcSBaccounting standards board makes rulesAcSOCaccounting standards oversight committee oversees and provides insight to the deliberations of the AcSB PSABpublic sector accounting board sets standards for public sector IASBinternational accounting standards board PAEs publicly accountable enterprisescorporations that have issued or plan to issue shares or debt in public markets required to follow IFRS standards PEs private enterprisesdo not need to follow IFRS but do need to follow standards developed by AcSBASPEaccounting standards for private enterprises standards developed by AcSB for PEs Underlying assumptions in accounting Entity assumption Forzani Group Ltd Is one entity and John Forzani is a separate entity the companies cash computers and equipment belong to the company not to John Forzani Going concern assumption the company is not wrapping up tomorrow Cost assumption reporting things at initial costs Stable monetary unit assumption the dollar is somewhat stable Financial statementsbusiness documents companies use to report results of activities to various user groups People make decisionsbusiness transactions occurbusinesses report results taxes authorities require accounting dataProprietorship Partnership Corporation Owners Proprietorone owner Partnerstwo or Shareholdersmore owners generally many owners Life of Entity Limited by owners choice or Limited by owners Indefinite death choice or death Personal liability Proprietor is personally liable Partners are usually Shareholders are not of owners for personally liable personally liable business debts Accounting Accounting entity is separate Accounting entity is Accounting entity is status from proprietor separate from separate from partners shareholdersAccounting equationAssetsliabilitiesshareholders equityAssetseconomic resources of a business Liabilitiesdebts payable to creditors Owners equitythe insider claims of a business the owners interest in the assets of a corporation Accounts receivablethe money due from customers that pay by credit Inventoryraw materials Capitalfixedplant assetsproperty plant and equipment Accounts payableliability for goods and services purchased on credit Owners equitycontributed capitalretained earnings Soassetsliabilitiescontributed capitalretained earningsContributed capitalamount shareholders have invested common shares Revenuesinflows of resources that increase retained earnings Expensesdecreases in retained earnings from operations Dividendsdistributions to shareholders of assets do not go under expensesRevenuesexpensenet income Net incomedividendsending balance of retained earningsstatement statement statement income of retained of financial of cash statement earnings position flows Current Liabilitiesdebts payable within one year or one normal operating cycle Long term liabilitiesliabilities due beyond one year after balance sheet date Auditsperformed by independent accountants to ensure that financial statements are correct and relevant with faithful representationChapter 2 Transactionany event that has a financial impact on a business and can be measured Has two sides give and receive and needs a dollar amount Accountrecord of all the changes in a particular asset liability or shareholders equity during a period ASSETSCashcash equivalentsAccounts receivablewhen a company sells goods and receives a promise for future collection of cashNotes receivablesimilar to accounts receivable but more binding cause the customer signs the notes and an interest rate is specified
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