BU127 Chapter 2: BU127 – CHAPTER 2

• School: WLU
• Department: Business
• Course: BU127
• Professor: David Scallen

Document Summary

Bu127 chapter 2: investing and financing decisions and the statement of. Important terms and concepts: primary objective of external financial reporting: provide financial information about a business to help external parties make sound financial decisions. Basic accounting principle: historical 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 on the date of the exchange. What was paid for the item on the date purchased is recorded. Elements of the classified statement of financial position: assets: economic resources controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained. 1/10/16: current assets: assets that will be used or turned into cash, normally within one year. 1/10/16: unusual for there to be a credit balance, liabilities a(cid:374)d sha(cid:396)eholde(cid:396)s" e(cid:395)uit(cid:455) a(cid:272)(cid:272)ou(cid:374)ts i(cid:374)(cid:272)(cid:396)ease o(cid:374) the (cid:396)ight side, (cid:272)(cid:396)eati(cid:374)g (cid:272)(cid:396)edit balances.