RSM219H1 Chapter Notes - Chapter 2: Accounting, Faithful Representation, Cost Basis
20 Sep 2013
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RSM219H1 Full Course Notes
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Chapter 2: a further look at financial statements. Current assets: are assets that are expected to be converted into cash (sold or used up) within one year of the company"s financial statement date or its operating cycle (whichever is longer). Operating cycle: the average time it takes to go from cash to cash in producing revenue: can exceed one year depending on the type of business. Common types of current assets: cash, short-term investments (trading investments) Investments in debt securities (i. e. bonds of another company) or equity securities (i. e. shares of another company) that are held in hopes of generating interest income and/or gains from profitable resale in the near term: accounts receivable. Amounts owed to the company by customers who purchased products/services on account: accrued receivables. Amounts owed to the company for interest, sales tax, rent, and like items: notes receivable (including loans receivable)
