COMMERCE 1AA3 Lecture Notes - Lecture 5: Accounts Receivable, Accrual, Market Liquidity

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Emad Mohammad

Document Summary

Reconciling net income to net cash from operating activities. If you affect the financial position of a company with an action, you should be recording it. Debit means left hand side, and credit means right hand side. Starred accounts (*) are ones that are allowed to swap sides when reducing. These elements appear on their normal balance sides. Check list of common accounts list to determine which side different accounts are on. If an account is contra, then it is the opposite of the non-contra account. Example 1: ( question is found on the powerpoints ) Cash is usually on the right hand side, but it can be on the right hand side when reducing. You sacrificed a liquid asset for a long-term asset. A company must meet a liquidity requirement for loans. A bank can force a company into bankruptcy, even if they have enough to pay interest.