MGAB01H3 Chapter Notes - Chapter All covered: Net Profit, Weighted Arithmetic Mean, Consignor

135 views13 pages
Published on 23 Jan 2017
School
Course
***Notes include hints on exams and things to be cautious for
Chapter 1
Internal decision makers- Copa’s aages
External Decision makers- Parties outside the firm such as investors, bank loan officer. We focus
on this.
Statements can be prepared any time but are mostly done in a specific period consistently.
Accounting entity- is the organization for which financial data are to be collected.
Assets are recorded as the total cost to incur it.
Provisions are estimated amounts payable in the future but the exact amount and timing
depend on future events
Creditors look at assets as way to judge whether the company has sufficient resources
available.
Creditors look at liabilities for current debts
Ceditos oside shaeholde’s euit as a potetie ushio.
Statement of Comprehensive income reports the change in shaeholde’s euit duig the
period excluding exchanges with shareholders.
Statement of Earnings reports revenue and expenses of the accounting period
Accounting period- the time period covered by the financial statements
Statements of changes in equit epots all hages to shaeholde’s euit duig the peiod
Statements of cash flows reports cash inflows and outflows that are related to operating,
investing and financing activities during the accounting period.
- Operating activities are cash flows that are directly related to generating earnings.
Ex. Cash collected from customers, cash paid for salaries and materials.
- Investing activities include cash flows related to the acquisition or sale of the
opa’s podutie assets. E. Puhase of Property, Plant and Equipment.
- Financing activities are directly related to the financing of the company itself. They
involve both the receipts and payments of cash to investors and creditors. Ex.
Dividends, payments and additions to loans, repurchase of own share.
Relationship of the statements:
-Net Earnings (statement of earnings) directly effects Retained earnings (Statement of changes
in Equity)
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 13 pages and 3 million more documents.

Already have an account? Log in
***Notes include hints on exams and things to be cautious for
-Edig Retaied eaigs is oe of the thee opoets of shaeholde’s euit o the
statements of financial position.
-The change in cash on the statement of cash flows added to the cash balance at the beginnings
of the year equals the ending balance at the end of the year, which appears on the statements
of financial position.
Notes provide supplemental information about the financial condition of a company, without
which the financial statements cannot be fully understood.
Three basic types of notes:
- Poides desiptios of the aoutig ules applied i the opa’s stateets
- Presents additional detail about a line on the financial statements
- Presents additional financial disclosures about items not listed on the statements
themselves.
Audit Report- desies the auditos’ opiio of the faiess of the fiaial stateets
presentations and the evidence gathered to support that opinion.
An audit is an examination of the financial reports to ensure that they represent what they
claim and conform the IRFS.
IFRS International Financial Reporting
Standard
ASPE
The four basic statements:
The four basic statements:
Statements of Comprehensive income
Income statement
Statement of changes in equity
Statement of retained earnings
Statement of financial position
Balance sheet
Statement of cash flows
Public accountable enterprises must use IFRS
for external reporting
Statement of Cash flows
Private enterprises may use IFRS or ASPE or
Neither if they are not dependents on
significant external sources of financing for
their operations
Chapter 2 Notes
Qualitative Characteristics of accounting information
2 Fundamental:
- Relevance: Relevant information can influence a decision, has predictive and/or
confirmatory value and must be disclosed in statements.
- Faithful Representation: suggest that information provided in the financial
statements must reflect the substance of the underlying transaction, which may
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 13 pages and 3 million more documents.

Already have an account? Log in
***Notes include hints on exams and things to be cautious for
differ from their legal form. The information must be compete, neutral (unbiased),
and free form material error.
4 enhancing:
- Comparability: of accounting across businesses is enhanced when similar accounting
methods have been applied.
- Verifiability: Information is verifiable if independent accountants can agree on the
nature and amount of a transaction
- Timeliness Information should be available to decision makers in time to be
considered in making decisions.
- Understandability is the quality of information that enables users to comprehend its
meaning.
The cost constraint- suggests that information should be produced only if the perceived
benefits of increased decision usefulness exceed the expected costs of providing that
information
Prudence- suggests that care should be taken not to overstate assets and revenues or
understate liabilities and expenses.
The separate entity assumption states that the activities of each business must be accounted
for separately from the activities of its owners.
The unit-of measure assumption states that accounting information should be measured and
reported in the national monetary unit (Canadian dollars in Canada). Accountants assume that
the unit of measure has a stable value over time (no inflation).
The continuity assumption states that business are assumed to continue to operate into the
foreseeable future.
The historical cost principle requires assets to be recorded at the historical cash-equivalents
cost, which is cash paid plus the current monetary value of all non-cash considerations also
given on the date of exchange.
Industry peculiarities - Use special accounting approaches because of the uniqueness of the
industry
A transaction has two types of events:
- External events: are exchanges of assets, goods or services by one party for assets,
services or promises to pay by one or more parties.
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows pages 1-3 of the document.
Unlock all 13 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
Monthly
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.