Relevance information disclosed in financial

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Unformatted text preview: rts is useful if it makes a difference in the context of making a decision. Relevance – Information disclosed in financial statements is relevant if it can influence user’s decision by helping them assess the impact of past activities and/or predict future events. Reliability – Information presented in financial statements is reliable when it is verifiable, unbiased, and accurate. Verifiability, neutrality, and representational faithfulness characterize the reliability of accounting information. Financial Accounting, Third Canadian Edition 6-11 Guiding Principles For Communicating Useful Information Comparability – enables users to identify similarities and discrepancies between two sets of financial reports produced by two different companies Consistency – enhances comparability by using the same accounting methods over time Financial Accounting, Third Canadian Edition 6-12 Financial Statement Formats Let’s take a closer look at the asset at asset section of the balance balance sheet! sheet! Financial Accounting, Third Canadian Edition 6-13 Financial Accounting, Third Canadian Edition 6-14 Current assets Current assets Current are assets that are assets that will be turned into will be turned into cash or expire cash or expire (be used up) (be used up) within the longer within the longer off one year or the o one year or the operating cycle. operating cycle. operating operating Financial Accounting, Third Canadian Edition 6-15 Property, plant and Property, plant and Property, equipment includes equipment includes assets with useful assets with useful llives of more than ives of more than one year acquired one year acquired ffor use in the or use in the business rather business rather tthan for resale. The han for resale. The amount is reported amount is reported net of accumulated net of accumulated amortization.. amortization amortization amortization Financial Accounting, Third Canadian Edition 6-16 IIntangible assets Intangible assets ntangible have no physic...
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This note was uploaded on 09/22/2012 for the course AFM 101 taught by Professor Kennedy during the Spring '08 term at Waterloo.

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