ch02-AFM101w2012

ch02-AFM101w2012 - Financial Accounting 2-1 PowerPoint...

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Unformatted text preview: Financial Accounting 2-1 PowerPoint Author: Robert G. Ducharme, MAcc, CA University of Waterloo, School of Accounting and Finance FINANCIAL ACCOUNTING Fourth Canadian Edition LIBBY, LIBBY, SHORT, KANAAN, GOWING Investing and Financing Decisions and the Statement of Financial Position Chapter 2 2-2 Financial Accounting Understanding the Business To understand amounts appearing on a companys statement of financial position we need to answer these questions: To understand amounts appearing on a companys statement of financial position we need to answer these questions: What business activities cause changes in the statement of financial position? What business activities cause changes in the statement of financial position? How do specific activities affect each balance? How do specific activities affect each balance? How do companies keep track of the amounts in the statement of financial position? How do companies keep track of the amounts in the statement of financial position? LO 1 2-3 Financial Accounting The Conceptual Framework LO 1 Objective of External Financial Reporting: To provide useful economic information to external users for decision making Qualitative characteristics of useful information: Relevance, faithful representation, comparability, verifiability, timeliness, and understandability Elements to Be Measured and Reported: Assets, Liabilities, Equity , Revenues, Expenses, Gains, Losses Concepts for Measuring and reporting Information: Assumptions : Separate-Entity, Unit-of-Measure, Continuity , Periodicity Principles : Historical Cost , Revenue Recognition, Matching, Full Disclosure Constraints : Materiality, Cost-benefit Concepts in red are discussed in Chapter 1 and 2 . 2-4 Financial Accounting The Conceptual Framework Qualitative Characteristics Relevance Faithful Representation Comparability Verifiability Timeliness Understandability Qualitative Characteristics Relevance Faithful Representation Comparability Verifiability Timeliness Understandability Elements of Statements Asset Liability Shareholders Equity Revenue Expense Gain Loss Elements of Statements Asset Liability Shareholders Equity Revenue Expense Gain Loss Objective of Financial Reporting To provide useful economic information to external users for decision making and for assessing future cash flows. LO 1 2-5 Financial Accounting Qualitative Characteristics Relevance Faithful Representation Comparability Verifiability Timeliness Understandability Qualitative Characteristics Relevance Faithful Representation Comparability Verifiability Timeliness Understandability Elements of Statements Asset Liability Stockholders Equity Revenue Expense Gain Loss Elements of Statements Asset Liability Stockholders Equity Revenue Expense Gain Loss Objective of Financial Reporting To provide useful economic information to external users for decision making and for assessing future cash flows....
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This note was uploaded on 04/02/2012 for the course AFM 101 taught by Professor Kennedy during the Winter '08 term at Waterloo.

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ch02-AFM101w2012 - Financial Accounting 2-1 PowerPoint...

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