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Chapter 2 - Chapter 2 Investing and Financing Decisions and...

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Chapter 2: Investing and Financing Decisions and the Balance Sheet UNDERSTANDING THE BUSINESS (Papa John’s International) Financial statement analysis : using financial statements of other companies to identify and evaluate activities mangers engaged in during past period Investing activities : asset acquisition activities Financing activities : borrowing funds from creditors or selling stock to investors to acquire assets OVERVIEW OF CONCEPTUAL FRAMEWORK Concepts Emphasized In Chapter 2 Objective of financial reporting o To provide useful economic information about a business to help external parties make sound financial decisions o Decision makers : users of accounting information (investors, creditors, etc.) Underlying assumptions of accounting o Separate-entity assumption : business transactions are separate from transactions of owners o Unit - of-measure assumption : accounting information should be measured and reported in national monetary unit o Continuity (going - concern) assumption : businesses are assumed to continue to operate into foreseeable future Elements Of Balance Sheet Assets : resources with probable future economic benefits
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Chapter 2 - Chapter 2 Investing and Financing Decisions and...

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