COMM 293 Chapter Notes - Chapter 2: Issued Shares, General Ledger, Deferred Income
Document Summary
Chapter two: investing and financing decisions and the statement of. Primary objective of external financial reporting: to provide useful economic information about a business to help external parties (investors, creditors) make sound financial decisions: qualitative characteristics of useful info: relevance, faithful representation, comparability, verifiability, timeliness, understandability. Elements to be measured and reported: assets, liabilities, equity, revenues, expenses, gains, losses. Concepts for measuring and reporting information: assumptions: separate-entity, unit-of-measure, continuity, periodicity, principle: historical cost, revenue recognition, matching, full disclosure, constraints: materiality, cost. Separate-entity assumption: states that business transactions are separate from the transactions of the owners. Unit-of-measure assumption: states that accounting information should be measured and reported in the national monetary unit: unit of measure has stable value over time. Continuity (going-concern) assumption: states that businesses are assumed to continue to operate into the foreseeable future. Periodicity assumption: provides guidance on measuring revenues and expenses (see chapter 3)
