RSM219H1 Lecture 4: Accounting Lecture 4
23 Oct 2016
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The risks and rewards of ownership are transferred to the customers. The vendor has no continuing involvement or control. Costs and revenues can be measured reliably. Collectability is probable. (the customer is likely to pay. ) Revenues should be measured at the fair value of the consideration received/receivable. Cash flows shows inflows and outflows. (it explains the change in cash balances) When positive - (able to generate sufficient cash and allows them. Investing long term assets. to pay for expenses. When negative (the company believes they are able to generate revenue in the future) ( going concern ) Financing a business issue shares or borrow (long term liabilities and capital) When negative- indicates that they are paying back their loans. When positive- (cid:373)ea(cid:374)s they are(cid:374)"t payi(cid:374)g (cid:271)a(cid:272)k their loans could mean that the company are investing. Anything in cash should be in local currency. Whe(cid:374) there is risks a(cid:374)d they"re (cid:448)ul(cid:374)era(cid:271)le: cash is untraceable.
