ACC 100 Chapter Notes - Chapter 2: Cash Flow, Financial Statement, Income Statement

• School: Ryerson University
• Department: Accounting
• Course: ACC 100
• Professor: Alison Beavis

Document Summary

Financial statements tell about a business: balance sheet tells what obligations will be due in the future and what assets will satisfy them. Objectives of financial reporting: primary objective: provide information for decision making, the primary objective is to communicate information to permit users of the information to make informed decisions. These can be both external and internal users: external users have no access to inner records, and rely on financial statements prepared by management. The understandability is the quality of accounting information that makes it comprehensible to those willing to spend the necessary time. It varies depending on the background of the user. Acsb believes that financial information should be comprehensible to those who possess a reasonable understanding of business and economic activities and accounting, and have a willingness to study the information with reasonable diligence: relevance. Relevance is the capacity of information to make a difference in a decision.