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Midterm

AFM101 Study Guide - Midterm Guide: International Financial Reporting Standards, Asset, Cash Flow Statement


Department
Accounting & Financial Management
Course Code
AFM101
Professor
Shari Mann
Study Guide
Midterm

This preview shows pages 1-3. to view the full 10 pages of the document.
Chapter 1
4 Major Statements
oBalance Sheet
oIncome Statement
oStatement of Cash Flows
oStatement of Retained Earnings
Who uses these?
oExternal – General Purpose fls (financial statements)
Investors
interested in cash flow statement to find earnings
statement of retained earning contains dividends
Creditors
Be repaid (SCF, B/S)
Profit – Oriented Organizations
How can we make money
Not-for-profit Organizations
How can we provide this service best
GAAP
oGenerally Accepted accounting policies
To ensure fair and equal financial representation
oInfo in CICA Handbook
Canada moving to international standards 2011
Currency
oCountry dependant
Private vs public companies
o85% of companies are private
only users are creditors and lenders
o15% are publicly traded
CICA Handbook
oI – International Financial Reporting Standards (IFRSs)
Public companies
oII – Accounting Standards for Private Enterprises (ASPEs)
PEs have a choice of IFRSs or ASPEs
oIII – Accounting Standards for Not-for-Profit Organizations
oIV – Accounting Standards for Pension Plans
oV – Pre-changeover standards
Material textbook is based on
4 Sheets:
COMPANY NAME
Document Name
Date/ Time period

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(in x dollars)
Balance Sheet
oAssets
Cash
Accounts receivable
Inventories
Prepaid expenses
Plant and equipment
Intangible assets
oLiabilities
Bank indebtedness
Accounts payable
Income taxes payable
Long term debt
Future income taxes
Income tax has its own rules
oShareholders Equity
Share capital
Retained earnings
oAssets = Liabilities + Shareholders Equity
Income statement
oRevenues
Sales revenues
oExpenses
Cost of goods sold
Selling and admin expenses
Interest expense
oNet income
Statement of retained earnings
oRetained Earnings
oNet income
oDividends
oNew Retained Earnings
Cash Flow statement
oCash flows from operating activities
oCash from investing
Price-Earnings Ratio
P-E Ratio = Market Value / Net Income
oMarket value is on shares
oValuation of Public Companies
oValuation of Private Companies

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Chapter 2
The objectives of financial accounting
Provide financial information to investors and creditors so they an make financial
decisions
Relevance
oPredictive value
oFeedback value
Reliability (choose purchasing price over market value)
oRepresents faithfulness
Unbiased
oReports the substance of the transaction
oTwo people will get the same answer
Understandability
oA person with base accounting knowledge and business knowledge will
understand
Comparability
oCompare between periods of same company
ocompare to other companies
Underlying assumptions
Separate entity
oKeep transactions separate per entity so better understand how each entity
is performing
Unit-of-measure
oSingle currency
Continuity or going concern
oThe business is expected to continue to operate for 12 months
Principles
Cost
oAll assets are recorded at the cost actually paid
Revenue
oRecognize when earned
When?
Performance is complete
Delivered product / provided service
Measured
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