AFM291-ch01

AFM291-ch01 - Chapter 1 AFM 291 chapter 1 1 Financial...

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AFM 291 chapter 1 1 Chapter 1 Chapter 1 The Canadian Financial Reporting Environment The Canadian Financial Reporting Environment
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AFM 291 chapter 1 2 Financial Reporting Financial Reporting Financial accounting provides historical information Financial reporting is used by both internal and external users External users include such decision makers as investors, creditors, unions, and government agencies Managerial accounting provides both historical and forecast information Managerial reporting information is used by management (internal users only)
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AFM 291 chapter 1 3 Accounting and Capital Accounting and Capital Allocation Allocation The accounting profession has the responsibility of measuring a company’s performance accurately, fairly, and on a timely basis These measurements enable investors and creditors to compare the income and assets employed by companies Investors can then assess the relative risks and returns associated with companies
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AFM 291 chapter 1 4 Stakeholders in Financial Stakeholders in Financial Reporting Reporting Broader definition of users is: anyone who prepares, relies on, reviews, audits, or monitors financial information Includes both internal and external parties Key stakeholders include: investors, creditors, auditors, regulators, analysts, management, standard setters, and others Investors and creditors rely on the financial statements to make decisions
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AFM 291 chapter 1 5 The overall objective of financial reporting is to provide information that is: 1. useful to users, and 2. decision relevant Financial statements should provide information about: 1. the entity’s economic resources and claims to those resources, and 1. changes
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This note was uploaded on 12/15/2010 for the course AFM 291 taught by Professor Clark during the Spring '10 term at Waterloo.

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AFM291-ch01 - Chapter 1 AFM 291 chapter 1 1 Financial...

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