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Final

Final Exam Accounting Notes.docx

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Department
Administration
Course Code
ADM2341
Professor
A L L

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FinalExamAccountingNotesChapter1AccountingtheinformationsystemthatidentifiesandrecordstheeconomiceventsofanorganizationandthencommunicatesthemtoawidevarietyofinterestedusersInternalUsersPlanorganizeandruncompaniesTheyworkforthecompanyIncludesfinancedirectorsmarketingmangershumanresourcepersonnelproductionsupervisorsandcompanyofficersExternalUsersInvestorslendersandothercreditorsareconsideredtobetheprimaryorkeyexternalusersofaccountinginformationEthicalBehaviorbyUsers3Steps1Recognizeanethicalsituationandtheethicalissuesinvolved2Identifyandanalyzethemainelementsinthesituation3IdentifythealternativesandweightheimpactofeachalternativeonvariousstakeholdersProprietorshipAbusinessownedbyonepersonLifeofbusinessislimitedtothelifeofownerReportingEntityconceptrequiresthattheeconomicactivitythatcanbeidentifiedwithaparticularcompanybekeptseparateanddistinctfromtheactivitiesoftheownersandshipsandcorporationswhicharediscussedinthenextsectionPartnershipAbusinessownedbymorethanonepersonNormallyformalizedinawrittenpartnershipagreementthatoutlinestheformationofthepartnershipUnlimitedliabilityCorporationsAbusinessorganizedasaseparatelegalentityownedbyshareholdersLimitedliabilityPubliccorporationsdistributetheirfinancialstatementstoinvestorslendersothercreditorsotherinterestedpartiesandthegeneralpublicConsolidatedmeansthatthefinanceresultsincludenotonlytheoriginalcompanybutalsothecompaniestheyownorcontrolPrivatecorporationsIssuesharesbuttheydonotmakethemavailabletothegeneralpublicnoraretheytradedonpublicstockexchangesGenerallyAcceptedAccountingPrinciplesGAAPincludebroadpoliciesandpracticesaswellasrulesandproceduresthathavesubstantiveauthoritativesupportandagreementabouthowtoreporteconomiceventsPrivatecorporationschoicebetweenIFRSorASPEPubliccorporationsIFRSBusinessActivitiesFinancingactivitiesactivitiesthatinclude1borrowingorrepayingcashtolendersor2issuingorreacquiringsharesorpayingdividendstoinvestorsInvestingactivitiesactivitiesthatincludepurchasinganddisposingoflonglivedassetssuchaspropertyplantandequipmentandlongterminvestmentsOperatingactivitiesactivitiesthatresultfromdaytodayoperationsandincluderevenuesandexpensesandrelatedaccountssuchasreceivablessuppliesinventoryandpayablesFinanceActivitiesThetwoprimarywaysofraisingoutsidefundsforcorporationsare1borrowingmoneyand2issuingsharesinexchangeforcashBankindebtednesswhenacompanyusesitsoperatinglineofcredittocovercashshortfallsandoverdrawsinthebankaccountLoanpayableMoneyborrowedLongtermpayablecanincludemortgagespayablebondspayablefinanceleaseobligationsInvestingActivitiesInvolvethepurchaseorsaleoflonglivedassetsthatacompanyneedsinordertooperateCashisoneofthemostimportantassetsOperatingActivitiesSourcesofrevenuethatarecommontomanybusinessesaresalesrevenueservicerevenueinterestrevenueandrentrevenueAccountingReceivableistherighttoreceivemoneyinthefutureExpensesarethecostofassetsthatareconsumedorservicesthatareusedintheprocessofgeneratingrevenuesCommunicatingwithUsers1IncomeStatementReportsrevenuesandexpensestoshowhowsuccessfullyacompanyperformedduringaperiodoftime2StatementofchangesinequityShowsthechangesineachcomponentofshareholdersequityaswellastotalequityduringaperiodoftime3StatementoffinancepositionAstatementoffinancepositionpresentsapictureofwhatacompanyownsassetswhatitowesliabilitiesanditsnetworthshareholdersequityataspecificpointintime4StatementofcashflowsShowswehreacompanyobtainedcashduringaperiodoftimeandhowthatcashwasusedAdditionalinformationisreportedinnotestothefinancialstatementsIncomeStatementReportsthesuccessorfailureofthecompanysoperationsforaperiodoftimeListthecompanysrevenuefirstthenitsexpensesAmountsreceivedfromissuingsharesarenotrevenuesandamountspaidoutasdividendsarenotexpensesStatementofChangesinEquityShowsthechangesintotalshareholdersequityfortheperiodaswellasthechangesineachcomponentofshareholdersequityduringtheperiodShareholdersequityincludessharecapitalandretainedearningsSharecapitalrepresentsamountscontributedbytheshareholdersinexchangeforsharesofownershipRetainedearningsrepresentthecumulativeprofitthathasbeenretainedinthecorporationIfnegativeitisknownasdeficitThestatementofchangesinequityalsoshowstheamountsandcausesofchangesinretainedearningsStatementofFinancialPositionBalanceSheetReportsassetsandclaimstothoseassetsataspecificpointintimeAccountingequationAssetsLiabilitiesOwnersEquityStatementofCashFlowsProvidesfinancialinformationaboutthecashreceiptsandcashpaymentsofabusinessforaspecificperiodoftimeReflectstheeffectsoncashofacompanys1Operatingactivities2investingactivitiesand3financingactivitiesduringtheperiodoftimeShowsthenetincreaseordecreaseincashduringtheperiodRelationshipsbetweentheStatements1Thestatementofchangesinequitydependsinpartontheincomestatement2Thestatementoffinancialpositionandstatementofchangesinequityareinterrelatedbecausetheendingbalancesofeachcomponentofshareholdersequity3ThestatementofcashflowsandthestatementoffinancialpositionarealsointerrelatedElementsofanannualreportAnnualreportisadocumentthatincludesusefulnonfinancialinformationaboutthecompanyaswellasfinancialinformationChapter1GlossaryTerms
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