C1 Chapter 02

C1 Chapter 02 - Chapter 2 Financial Statements and the...

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2-1 Chapter 2 Financial Statements and the Annual Report Financial Accounting 1 st Canadian ed. by PNCS-B
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2-2 Primary Objective of Financial Reporting Invest?? Borrow $$?? Sell shares or bonds?? Start new business?? Loan $$?? Extend credit $$?? Provide information for decision making
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2-3 Secondary Objectives of Financial Reporting Assess investor/ creditor cash receipts Assess cash flows to company Assets = Liabilities + OE Reflect resources and claims to them
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Qualitative Characteristics Understandability - Relevance - Reliability - To those willing to take the time to understand it Represents what it purports to Has capacity to make a difference
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2-5 Qualitative Characteristics Neutrality Conservatism When in doubt, err on negative side The information should not be slanted in any way
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2-6 Qualitative Characteristics between companies Comparability from one period to the next Consistency
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2-7 Qualitative Characteristics Materiality Benefit vs. cost Benefit of accounting information should exceed its cost Will it make a difference to the decision maker?
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2-8 Typical Operating Cycle CASH Time it takes to go from cash back to cash INVENTORY ACCTS. RECEIVABLE
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C1 Chapter 02 - Chapter 2 Financial Statements and the...

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