ADMS 2500 Chapter Notes -Income Statement, Commercial Paper, Money Market Fund

• School: York University
• Department: Administrative Studies
• Course: ADMS 2500
• Professor: Brian Gaber

Document Summary

Reports revenue and expenses on a comparable basis from year to year (business to business) Revenue recognized when business delivers good or provides service regardless of when paid. Expenses are matched in same accounting period regardless of when suppliers, employers or taxing authorities are paid. Cash basis provides objective measure of performance. Assess amount, timing and uncertainty of future cash flow and evaluate financial flexibility and quality" of reported earnings. Cash flow statement: measures performance on a cash basis. Reports sources (inflows) and uses (outflows) of cash during period. Income statement tells us how profitable company is not solvency (cash flow statement does) When business operations are making cash, they can: When using more cash than generating options are reduced and firm needs more financing. The sources and uses of cash and cash equivalents. Cash equivalents are short term, highly liquid investments (ex: t-bills, commercial paper, money market funds) Cash + cash equivalents - short term bank borrowings.