BU127 Chapter Notes - Chapter 2: Accounts Payable, General Ledger, Accounting Equation
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BU127 Full Course Notes
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Document Summary
Chapter 2: investing and financing decisions and the. Understanding the business: to understand amounts on financial position statements we need to answer the following . What business activities cause changes in the statement of financial position. It provides financial info about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources for the company. Relevance: makes a difference in a decision, predictive value, feedback/confirmatory value. Faithful representation: complete neutral, reasonably free from error or bias. Enhancing characteristics: degree of usefulness comparability: across companies. Timeliness: information must be available before it loses its usefulness. Understandability: allows reasonably informed users to see the significance of the information. Assets, liabilities, shareholders" equity, investments by owners, distribution to owners owners. Assumptions: separate entity, stable monetary unit, continuity (going concern), periodicity. Principles: mixed attribute measurement, revenue recognition, full disclosure.
