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MGTA01H3 (583)
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Chapter 1-4

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University of Toronto Scarborough
Management (MGT)

Chapter 1 ACCOUNTING Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers.Page 2 ACCOUNTING ENTITY An Accounting Entity is the organization for which financial data are to be collected. Page 5 ACCOUNTING PERIOD The Accounting Period is the time period covered by the financial statements. Page 10 ACCOUNTING STANDARDS BOARD (AcSB) The Accounting Standards Board (AcSB) is the private- sector body given the primary responsibility to work out the detailed r ules that become accepted accounting standards. Page 19 AUDIT An Audit is an examination of the financial reports to ensure that they represent what they claim and conform with International Financial Reporting Standards. Page 22 AUDIT REPORT (REPORT OF INDEPENDENT AUDITORS) The Audit Report (Report of Independent Auditors) describes the auditors' opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion. Page 22 BASIC ACCOUNTING EQUATION Assets = Liabilities + Shareholders' Equity Page 6 INCOME STATEMENT The Income Statement reports the revenues less the expenses of the accounting period. Page 9 INTERNATIONAL ACCOUNTING STANDARDS BOARD The International Accounting Standards Board is an independent standard-setting board that is responsible for the development and publication of International Financial Reporting Standards. Page 20 INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) International Financial Reporting Standards (IFRS) are guidelines for the measurement rules used to develop the information in financial statements.Page 19 NOTES (FOOTNOTES) Notes (Footnotes) provide supplemental information about the financial condition of a company, without which the financial statements cannot be fully understood. Page 17 ONTARIO SECURITIES COMMISSION (OSC) The Ontario Securities Commission (OSC) is the most influential Canadian regulator of the flow of financial information provided by publicly traded companies in Canada. Page 19 REPORT TO MANAGEMENT (MANAGEMENT CERTIFICATION) The Report to Management (Management Certification) indicates management's primary responsibility for financial statement information and the steps to ensure the accuracy of the company's records. Page 21 RETAINED EARNINGS Retained Earnings reflect the profits that have been earned since the creation of the company but not distributed yet to shareholders as dividends or refers to the accumulated earnings of a company that are not distributed to the owners and are reinvested in the business Page 12 SECURITIES AND EXCHANGE COMMISSION (SEC)The Securities and Exchange Commission is the U.S. government agency that determines the financial statements that public companies must provide to shareholders and the measurement rules that they must use in producing those statements. Page 19 STATEMENT OF CASH FLOWS The Statement of Cash Flows reports cash inflows and outflows that are related to operating, investing, and financing activities during the accounting period. Page 13 STATEMENT OF CHANGES IN EQUITY The Statement of Changes in Equity reports all changes to shareholders' equity during the accounting period. Page 12 STATEMENT OF COMPREHENSIVE INCOME The Statement of Comprehensive Income reports the change in shareholders' equity, during a period, from business activities, excluding exchanges with shareholders. Page 9 STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) A Statement of Financial position (Balance sheet) reports the financial position (assets, liabilities, and shareholders' equity) r 1 Chapter 2 ACCOUNT a standardized format that organizations use to accumulate the monetary effects of transactions on each financial statement item. ASSETS economic resources controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained. CONTINUITY-ASSUMPTION states that businesses are assumed to continue to operate into the foreseeable future. COST-PRINCIPLE requires assets to be recorded at the historical cash-equivalent cost, which is cash paid plus the current monetary value of all non- cash considerations also given in the exchange, on the date of the transaction. CREDIT the right side of an account. CURRENT-ASSETS assets that will be used or turned into cash, normally within one year. Inventory is always considered to be a current asset, regardless of the time needed to produce and sell it. CURRENT-LIABILITIES ( short-term ) obligations that will be paid in cash (or other current assets) or satisfied by providing service within the normal operating cycle or one year, whichever is longer DEBIT the left side of an account. JOURNAL-ENTRY provides a summary of a transaction and its effects on various accounts, using the double-entry bookkeeping LIABILITIES present debts or obligations of the entity that result from past transactions, which will be paid with assets or services. or are debts or obligations arising from past transactions that will be paid with assets or services NON-CURRENT-ASSETS considered to be long term because they will be used or t urned into cash over a period longer than the next year. NON-CURRENT-LIABILITIES a company's debts that have maturities extending beyond one year from the date of the statement of financial position or are all of the entity's obligations not classified as current liabilities. PRIMARY-OBJECTIVE-OF-EXTERNAL-FINANCIAL-REPORTING provide useful economic information about a business to help external parties make sound financial
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