MGAB01H3 Chapter Notes - Chapter 2: Trial Balance, Share Capital, Current Liability
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MGAB01H3 Full Course Notes
Verified Note
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Document Summary
Transaction: an exchange between a business and one or more external parties to a business or a measurable internal event, such as adjustments for the use of assets in operations. Account: a standardised format that organizations use to accumulate the monetary effects of transactions on each financial statement item. Primary objective of external financial reporting: provides useful economic info about a business to help external parties make sound financial decisions. Primary qualitative characteristics: relevance: timely, predictive and has feedback value, faithful representation: accurate, unbiased and verifiable. Secondary qualitative characteristics: comparability: across businesses, consistency: overtime, understandability. Separate entity: business transactions are separate from the transactions of the owners. Unit of measure: accounting info should be measured and reported in the national monetary unit. Continuity (going concern): businesses are assumed to continue to operate into the foreseeable future without forced liquidation. Periodicity: the long life of a company can be reported in shorter periods.
