Textbook Notes (362,879)
Canada (158,081)
MGAB01H3 (126)
Liang Chen (50)
Chapter 1

Chapter 1

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University of Toronto Scarborough
Financial Accounting
Liang Chen

Chapter 1 Continued Common shares are the term used to describe the amount paid by investors for shares of ownership in a company. Shareholders have no rights to claim to corporate resources until all creditors have been paid. Many companies pay shareholders a return on their investment on a regular basis called dividends. Investing Activities These activities involve the purchase of long-lived resources called assets. Investing generally involves long-lived assets, such as property, plants, and equipment. Operating Activities These activities create revenues and expenses. Items that are held for sale for future are called inventory. Once the goods are sold, they are expenses (cost of goods sold). Communicating with Users Four main financial statements: statement of earnings, statement of retained earnings, balance sheet, cash flow statement. Additional information is reported to the notes of the financial statements. Financial Statements Statement of earnings J reports the success or failure of the company[s operations for a period of time J annually, quarterly, or monthly. Revenues are listed before expenses. Note that cents are not reported on financial statements. They are only used during the recording process; otherwise, accounts are rounded to the dollar. Statement of retained earnings J retained earnings is the cumulative earnings that have been reta
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