AFM101 Chapter Notes - Chapter 3: Income Statement, Retained Earnings, Weighted Arithmetic Mean

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Operating (cash to cash) cycle: time it takes for a company to pay cash to suppliers, sell goods, and collect cash from customers. Short term debt financing may be needed if say they need to expand or don"t have enough money atm during when they buy supplies till they sell products. Periodicity assumption: long life of a company can be reported in shorter periods. 3 sections in income statement: results of continuing operations, results of discontinued operations. Profit (sum of 1 and 2: earnings per share. Expense is when asset is used to generate revenue (supplies, machinery) or incurred to generate revenue (electricity) Primary operating expenses: cost of goods sold (cogs) cost of products sold to customers, operating expenses --- anything else lol. Int"l acct"g standards 1 requires companies to classify expenses as (either or) 3: function marketing and promotion, distribution, admin, nature materials, labour, property and equipment. Ie investments in other companies: dividends earned = investment/finance income.