AFM101 Chapter Notes - Chapter 1: Financial Statement, Sole Proprietorship, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Kaleab Mamo

Document Summary

Chapter 1 financial statements and business decisions. Owners of a company: monitor managers and the company. Managers: day to day operation of the company. Government and regulatory entities: enforcing financial and tax regulations. Understand: the four basic financial statements. The information conveyed in each statement, and. The relationships among the statements: the role of international financial accounting standards (ifrs, the role of managers and auditors, the importance of ethics, reputation, and legal liability. For objectives 2-4, read pages 17-23 of the textbook. Types of businesses (appendix a of chapter 1) The business is not legally separate from the owner. The business is not legally separate from partners. Usually multiple owners (or investors, or shareholders) The business is a legally separate entity. Investors: individuals and groups who provide capital to a business: they own shares of the businesses (shareholders, investors/shareholders look for 2 sources of possible gain. Sell ownership interest in the future for more money than they paid.