AFM123 Chapter Notes - Chapter 2: Current Liability, Non-Functional Requirement, Starbucks

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM123
• Professor: Khin Phyo Hlaing

Document Summary

Equity financing refers to financing that a business obtains through owners contribution and reinvestments of profit. Debt financing refers to financing that the business obtains through loans, a business is obligated to repay debt financing but not equity financing. Operating assets: things needed to run the business e. g. for pizza shop you will need cutlery, dinner ware, ovens etc. Businesses typically buy goods or services on credit. External exchanges: exchanges involving assets, liabilities and or shareholders equity that you can see between the company and someone else, e. g. when starbucks sells you a frap, you will pay then in return u will get a drink. Internal events: do not involve exchanges with others outside the business but rather occur within the company itself. E. g. when red bull combines sugar, water etc. to turn that all into the red bull drink. An exchange of promises is not an accounting transaction. Ledger account: keep track of financial effects on each account.