BU127 Chapter Notes - Chapter 4: Current Liability, Cash Flow, Profit Margin
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BU127 Full Course Notes
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Document Summary
Bu127 chapter 4: adjustments, financial statements, and the quality of. Managers are responsible for preparing financial statements that are useful to investors, creditors, and others. Financial info useful for analyzing the past and predicting the future when it"s considered by users to be high quality. Most companies wait until the end of the period to record adjustments to revenue and expense accounts to reflect proper amounts in correct period. Analysts, creditors, and investors assess quality of financial info by determining how prudent managers" estimates and judgments are. Choices not overstating assets and revenues or understanding liabilities and expenses are considered prudent. Accounting cycle: process used to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, prepare the records for the next. Cash isn"t always received in the period in which company earns revenue, and cash isn"t always paid in the period in which company incurs expense.
