AFM123 Chapter Notes - Chapter 3: Gift Card, Accounting Equation, Revenue Recognition

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Operating activities are the day to day functions in running a business, these activities occur regularly and oftenh as a shorter duration of effect. Operating activities - primary source of revenues and expenses- and can determine whether a company earns a profit or incurs a loss. Selling goods and services to customers and then collecting cash. The period from buying goods and services through collecting cash from customers is known as the operating cycle. Summarizes the financial impact of operating activities undertaken by the company during the accounting period, which includes 3 main sections. Include using space in a building, supplies for providing services or the effort of employees. Whenever a business uses up its resources to generate revenues during a period it reports an expense, regardless of whether or not a payment was made. Total that made by subtracting expenses from revenues. Summarizes the overall impact of revenues and expenses in a single number.

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