BU127 Chapter Notes - Chapter 3: Promissory Note, Gross Margin, Accrual
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BU127 Full Course Notes
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Document Summary
Accounting: chapter 3 operating decisions and the. Businesses need to develop: goals, plans, strategies, measurable indicators. Time it takes for a company to pay cash to suppliers and to sell those goods and services to customers and then collect cash from customers. Steps: purchase supplies off credit (notes payable, pay suppliers, deliver product/service to customers for credit (notes receivable, receive payments from customers. To meet needs of decision makers, financial info is reported for a relatively short time periods (monthly, quarterly, annually) Time period: the life of the company can be reported over a series of shorter time periods. Measurement issues: what amounts should be recorded. Single step format: revenues followed by expenses and then shows the difference between revenues and expenses. Multiple step format: (sales) (cost of goods) = gross margin or gross profit. Other expenses are then deducted to show operating earnings (income) Increase in assets or settlement of liabilities from ongoing operations.
