BUS 251 Chapter Notes - Chapter 4: The Bookstore, Accounts Receivable, Financial Statement
Document Summary
Revenue is usually one of the largest amounts on the financial statements. The net income, which is a key indicator of the performance of a company, partially depends on the amount of revenues that is earned. Under the accrual-basis accounting, cash inflow (outflow) is not equivalent to revenue (expense) Rather, it depends on some specific criteria, and expenses associated with the revenues must be recognized at the same time (the matching concept) The day-to-day operating activities involve cash outflows followed by cash inflows. Initial amount of cash comes from the original investment by shareholders or loans. Undertake the investing activities of acquiring property, plant, and equipment. Hires labor and purchases the inventory o o o o. All activities that are designed to promote and sell the product. The goods may be returned for various reasons, resulting in no cash collection. Price allowance: buyer may ask for a price adjustment due to damage in shipment.