Textbook Notes (270,000)
CA (160,000)
UTSC (20,000)
MGA (400)
MGAB01H3 (100)
Chapter 2

Chapter 2


Department
Financial Accounting
Course Code
MGAB01H3
Professor
Liang Chen
Chapter
2

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Canada
x Accounting standards board
x 5 books
International
x International accounting standards board
Conceptual framework
Qualitative characteristics
1. Faithful representatives (reliability)
2. Relevance (predictive value, feedback, timely)
3. Comparability
4. Understandability
Assumptions
x Monetary unit (everything is
converted into currency)
x Economic entity
(business/separation entity)
x Time period (needs a cutoff
for business cycle)
x Going-concern
Principles
x Cost principle
(everything is recorded
at cost price)
x Revenue recognition
(revenue is recorded in
the period it is earned)
x Matching principle
(matching expenses to
revenue)
x Full disclosure
Constraints (limitations)
x Cost-benefit
x Materiality (how
significant)
Revenue recognition characteristics
Obligation is fulfilled
Evidence of exchange
Collection of money is ideal
MIDTERM QUESTION
Automobile - Sticker price t 60000
Ad t 56000
Friend t 58000
Paid t 50000 t Trade in (4500) = 45500
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