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Chapter 2 and 3 slides

Chapter 2 and 3 slides - paper cups $4 • Saturday –...

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The Balance Sheet and Income Statement Chapters 2 & 3
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Conceptual Framework Objectives of Financial Reporting “The objective of financial statements is to communicate information that is useful to investors, members, contributors, creditors and other users in making their resource allocation decisions and / or assessing management stewardship.” (CICA Handbook, 1000.15)
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Conceptual Framework Entity Assumption Monetary Unit Assumption Going Concern Assumption Periodicity Assumption
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Conceptual Framework Historical Cost Principle Revenue Recognition Principle Matching Principle
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Lemonade Example Child wants to run a lemonade stand on the weekend Takes $30 from piggy bank Buys 4 dozen lemons @ $5 / dozen, 1 package
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Unformatted text preview: paper cups @ $4 • Saturday: – sells lemonade for $19 cash plus promise of $3 – uses 2 dozen lemons, half the cups – friend repays $5 that he borrowed two weeks ago • Sunday: – sells lemonade for $18 cash, collects $3 promised – uses remaining lemons & cups Conceptual Framework • Role of Judgement and Estimates in GAAP • Management incentives to violate GAAP Business Transactions • Characteristics of Transactions • Journals • Accounts • Transaction Analysis Business Transactions • T-accounts • Debits and Credits • Journal Entries Ratios • Financial Leverage Ratio – Definition – Interpretation • Asset Turnover Ratio – Definition – Interpretation...
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Chapter 2 and 3 slides - paper cups $4 • Saturday –...

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