ACCT 1201 Chapter Notes - Chapter 2: Current Asset, General Ledger, Accounting Equation
26 Jan 2015
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2 investing and financing decisions and the balance sheet : external financial reporting provides useful economics information about a business to help decision makers (primary investors and creditors) project a business"s future cash inflows and outflows. Qualitative characteristics: relevancy: information is timely and has predictive and/or feedback value, reliability: information is accurate, unbiased, and verifiable, comparability. Business transactions are accounted for separately from the transactions of owners: unit-of-measure assumption. Accounting information should be measured and reported in the national monetary unit: continuity assumption. Businesses are assumed to continue to operate into foreseeable future: time period assumption. The long life of a company can be reported in shorter timer periods. Cash paid + $ value of all noncash considerations = historical cost: revenue recognition. Revenues are recognized as soon as a product has been sold: matching. Important information should be disclosed within the statement.
