AFM101 Study Guide - Fall 2018, Comprehensive Midterm Notes - Accounting, Balance Sheet, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Haihao Lu

Document Summary

Accounting is a system that identifies, measures, and communicates information that is relevant and reliable to help users make better decisions. Financial statements are the business documents that companies use to report the results of their activities to various user groups. The system of accounting produces the following 4 statements. Provides information for internal and external users. Accountants prepare financial statement information according to professional guidelines called gaap (generally accepted accounting principles) Gaap specify the standards for how accountants must record, measure, and report financial information. Canadian public enterprises must use international financial reporting. Canadian private enterprises can use ifrs or accounting standards for private. Gaap and aspe are set by the cpa of canada. Net earnings is excess of total income over total expenses incurred during the period. Net income (loss) = total revenue and gains - total expenses and losses. Retained earnings (re) represents the company"s accumulated net income since its exception, less net losses and dividends declared.