MGAB01H3 Chapter Notes - Chapter 2: Financial Statement, Faithful Representation, Historical Cost

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22 Sep 2016
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MGAB01H3 Full Course Notes
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MGAB01H3 Full Course Notes
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Chapter 2: investing and financing decisions and the statement of financial position. Goal of financial accounting is to provide financial information to external users to aid them in making accurate financial decisions. Qualitative characteristics of accounting information: relevance: by using information that either predicts or confirm information (relevant information) Cost constraint: information should be produced if the cost of preparing financial statements are less than the benefits that are associated with it. Historical cost principle: assets to be recorded at the historical cash-equivalent cost (cash + current monetary value of all non-cash considerations (assets/privilege/rights)) given the day of exchange. Assets: economic resources controlled by a business entity that may result in economic benefits. Consolidated: classified elements of a company is combined with other businesses" the company may own. Assets typically include: current assets (short term) Other current assets: non-current assets (long term) Liabilities: debts and obligations that are resulting from previous transactions and will be paid with assets or services.

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