BU127 Chapter Notes - Chapter 2: Accounting Equation, Byrsonima Crassifolia, Bookkeeping
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BU127 Full Course Notes
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Document Summary
Chapter 2: investing and financing decisions and the statement of financial. To understand the amounts that appear on a company"s statement of nancial position, we need to consider the following questions: what business activities cause changes in the amounts reported on the statement of. Provides guidance on the essential characteristics that determine the usefulness of accounting information. Accounting information that embodies the best balance of these characteristics will be of high quality to external decision makers. Bu127: relevance (a. k. a. relevant information): has predictive and/or con rmatory value that can in uence a decision ex) net earnings (helps you predict future net earnings) Material amounts: amounts that are large enough to in uence a user"s decision. Immaterial amounts: amounts that are not large enough to in uence a user"s decision: faithful representation: suggests that information provided in nancial statements is complete, neutral, and free from error or bias.
