COMM 293 Chapter 2: Chapter 2 Notes (facc).doc
Document Summary
Assumptions: separate entity assumption: business transactions are separate from the transactions of the owners unit of measure assumption, accounting information should be measured and reported in the national monetary unit continuity assumption, business are assumed to continue to operate into the foreseeable future cost principle, requires assets to be recorded at the historical cash equivalent cost, which on the date of the transaction is cash paid plus the current dollar value of all non cash considerations also given in the exchange. Classified balance sheet: assets, liabilities, shareholders" equity consolidated: classified elements of their balance sheet are combined with those of other companies under their control, assets, current assets (listed in order of liquidity [how quickly they can be transformed into cash]): cash short term investments accounts receivable inventory prepaid expenses, non current assets: long term investments property, plant, equipment intangible assets.
