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BUSI 2150U Study Guide - Canada Revenue Agency, Statement Of Changes In Equity, Ibm General Parallel File System


School
UOIT
Department
Business
Course Code
BUSI 2150U
Professor
Michael Konopaski

This preview shows pages 1-2. to view the full 7 pages of the document.
FINANCIAL ACCOUNTING: A CRITICAL APPROACH
CHAPTER 2: FINANCIAL STATEMENTS: A WINDOW ON AN ENTITY
WHO PREPARES FINANCIAL STATEMENTS?
PUBLIC COMPANIES (E.X; APPLE COMPUTERS)
PRIVATE COMPANIES
GOVERNMENT ENTITIES - FEDERAL, PROVINCIAL, MUNICIPAL
NOT-FOR-PROFIT ORGANIZATIONS
FINANCIAL STATEMENTS:
BALANCE SHEET
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN EQUITY OR STATEMENT OF RETAINED EARNINGS
STATEMENT OF CASH DLOW
NOTES TO THE FINANCIAL STATEMENTS
GENERAL PURPSOSE F/S:
GENERAL PURPOSE FINANCIAL STATEMENTS (GPFS) INTENDED FOR ALL USERS
PREPERARED IN ACCORDANCE WITH GAAP CANADIAN GAAP, IFRS, PUBLIC SECTOR GAAP, ETC.
PREPARED AT LEAST ONCE PER YEAR
MUST BE INTERPRETED BY USER
UNDERLYING ISSUES:
CONSOLIDATED STATEMENTS
COMPARATIVE YEARS
FISCAL PERIOD IS IDENTIFIED
ROUNDING
MATERIALITY:
MATERIALITY IS THE SIGNIFICANCE OF FINANCIAL INFORMATION TO STAKEHOLDERS
INFORMATION IS MATERIAL IF ITS OMISSION OR MISSTATEMENT AFFECTS THE JUDGEMENT OF
THE USERS OF THE FINANCIAL STATEMENTS
FINANCIAL STATEMENTS SHOULD BE FREE OF MATERIAL MISSTATEMENTS OR ERRORS, AND ALL
MATERIAL INFORMATION SHOULD BE REPORTED IN THE FINANCIAL STATEMENTS OR NOTES
BECAUSE ITS ABSENCE MAY AFFECT DECISION MAKING
WHAT INFORMATION SHOULD BE CONSIDERED MATERIAL?
THE BALANCE SHEET:
A SUMMARY OF AN ENTITY’S FINANCIAL POSITION AT A POINT IN TIME
ALSO KNOWN AS “STATEMENT OF FINANCIAL POSITION”
ELEMENTS: - ASSETS (A), LIABLITIES (L), OWNERS’ EQUITY (OE)
PRELIMINARY DEFINITION OF THE ELEMENTS:
ASSETS (A) ARE ECONOMIC RESOURCES THAT PROVIDE FUTURE BENEFITS TO AN ENTITY
LIABILITIES (L) ARE AN ENTITY’S OBLIGATIONS
OWNERS’ EQUITY (OE) IS THE INVESTMENT THE OWNERS HAVE MADE IN THE ENTITY
INFORMATION ABOUT AN ENTITY’S FINANCIAL POSITION CAN HELP STAKEHOLDERS:
EVALUATE ITS FINANCIAL HEALTH
ASSESS ITS RISK
PREDICT ITS FUTURE CASH FLOWS
ACCOUNTING EQUATION:
THE ACCOUNTING EQUATION IS THE CONCEPTUAL FOUNDATION OF ACCOUNTING
ASSETS (A)
LIABILITIES (L)
OWNERS’ EQUITY (OE)
(A = L + OE)

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

ALL ECONOMIC EVENTS ENTERED INTO AN ACCOUNTING SYSTEM ARE SUMMARIZED IN TERMS OF THE
ACCOUNTING EQUATION
EACH EVENT IS RECORDED BASED ON ITS EFFECT ON ASSETS, LIABILITIES, AND OWNER’S EQUITY
THE EQUALITY BETWEEN THE LEFT SIDE AND RIDE SIDE OF THE EQUATION MUST BE MAINTAINED FOR
ANY EVENT ENTERED INTO AN ACCOUNTING SYSTEM
REMEMBERS WITH OWNERS’ EQUITY
REVENUE AND EXPENSES ARE COMPONENTS OF OWNERS’ EQUITY
ACCORDING TO IFRS, AN ASSET MUST HAVE THE FOLLOWING CHARACTERISTICS:
PROVIDE A FUTURE BENEFIT TO THE ENTITY
IT MUST BE PROBABLE THAT THE ENTITY WILL ENJOY THE BENEFIT
ASSETS ARE ECONOMIC RESOURCES AVAILABLE TO ENTITY
CURRENT ASSETS
USED UP WITHIN ONE YEAR (OPERATING CYCLE)
NON-CURRENT ASSETS
BENEFITS EXTENDED BEYOND ONE YEAR
ASSET CRITERIA:
RESULT FROM TRANSACTION WITH ANOTHER ENTITY
COST CAN BE DETERMINED
MUST PROVIDE FUTURE BENEFIT
BENEFIT MUST BE REASONABLY MEASURABLE
ASSETS:
EXAMPLES OF ASSETS (SEE TABLE 2.1)
CASH
ACCOUNTS RECEIVABLE
INVENTORY
PROPERTY, PLANT AND EQUIPMENT
ISSUES
DEFINITION OF ASSET DOES NOT INCLUDE “OWNERSHIP” BY THE ENTITY (E.X; LEASED ASSETS)
SOME ASSETS ARE “MISSING” (E.X; BRANDS, GOODWILL, INTELLECTUAL CAPITAL)
ASSETS TO YOU AND ME, BUT NOT TO ACCOUNTANTS:
RESEARCH
HUMAN RESOURCES
GOODWILL (IF NOT PURCHASED)
TRADEMARKS AND BRANDS (IF NOT PURCHASED)
ADVERTISING
LIABILITIES:
LIABILITIES ARE AN ENTITY’S OBLIGATION TO PAY MONEY OR PROVIDE GOODS OR SERVICE TO SUPPLIERS,
LENDERS, CUSTOMERS, AND GOVERNMENT
ACCORDING TO IFRS, A LIABILITY MUST:
BE THE RESULT OF A PAST TRANSACTION OR ECONOMIC EVENT
REQUIRE SOME KIND OF ECONOMIC SACRIFICE TO SETTLE
OBLIGATIONS INCURRED BY ENTITY
NOT NECESSARILY A LEGAL OBLIGATION
CURRENT LIABILITIES: PAID OR SATISFIED WITHIN ONE YEAR
NON-CURRENT LIABILITIES: PAID OR SATISFIED BEYOND ONE YEAR
EXAMPLES OF LIABILITIES (SEE TABLE 2.2)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
CUSTOMER’S DEPOSITS
INCOME TAXES PAYABLE
DEFERRED WARRANTY PLAN REVENUE
DIVIDENDS PAYABLE
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