ECON 20 Lecture Notes - Lecture 1: Accrual, Cash Flow, Net Income
8 May 2020
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Document Summary
Entity"s ability to generate future cash flows. Entity"s ability to pay dividends and obligations. Reasons for difference between net income and net cash provided (used by operating activities. Cash investing and financing transactions during the period. Significant noncash activities in statement of cash flow. Issuance of common stock to purchase assets. Net income under cash must be higher then net income under accrual. Land all necessary costs incurred in making land ready for its intended use increase (debit) the. Not in land because we don"t depreciate land. We do depreciate the cost of land improvements over their useful lives. All equipment included in parts of assets. The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner. Land is viewed as a nonwasting asset. Salvage value: estimate of the assets value at the end of its useful life. Straight-line: expense is same amount for each year.
