MGFB10H3 Chapter Notes - Chapter 3: Capital Loss, Tax Deduction, Canada Revenue Agency
Document Summary
Accounting is simply an organized way of summarizing all of a firm"s transactions and presenting them in such a way that external users can understand the firm"s affairs. Auditors simply attest to whether or not the financial statements fairly represent the firm"s financial position according to generally accepted accounting principles. Bookkeeping is different from accounting: bookkeeper manages all the transactions in a firm while the accountant uses them to create the firm"s financial statements by applying gaap. In bookkeeping, there is double entry accounting (debits must equal credits) Liquidity: the ease w/ which assets and liabilities are converted to cash. The most basic principles of gaap are: the entity concept: accounting is done for an economic entity, he going concern principle, a period of analysis (e. g. yr end balance sheet, a monetary value, matching principle. Expenses and revenue must match the period even if the cash components of the transaction occur in other periods: revenue recognition.
