Who are the two users of accounting?
Internal, External
Who are internal users?
Company officers, management, hr, other areas
Who are external users?
Investors, customers, employees, authorities, etc.
What are the forms of Business Organizations?
Proprietorship, Partnership, Corperation
What is a Proprietorship? (Benefits, drawbacks)
Owned by 1 person. Simple to set up, owner has full control. Limited life, unlimited liability, income tax paid by owner.
What is a partnership? (Benefits, drawbacks)
Owned by more than one person, formalized written agreement. Limited life, each partner unlimited liability, income tax paid by individual partners.
What is a corporation? (Benefits, drawbacks)
Separate legal entity, indefinite life, ease of raising capital, limited liability for share holders, corporations pay income tax, may be public or private.
What is IFRS?
International Financial Reporting Standards. Used by publicly traded corporations.
What is ASPE?
Accounting Standards for Private Enterprises. Used by private corporations.
What are the three business activities?
Financing, investing, operating
What is the definition of financing activities?
Obtaining (and repaying) funds to finance operations of business.
List some examples of financing activities
Issuing or repurchasing shares (equity financing), borrowing money or repaying loans (debt financing).
What are some forms of debt?
Bank indebtedness, bank loan payable, long-term debt
such as mortgages payable, bonds payable, finance lease
obligations.
What is the definition of Investing Activities?
Purchase or sale of long-lives assets such as property, plant and equipment and intangible costs.
List some examples of Investing Activities.
Purchase or sale of long-lived assets such as property,
plant and equipment and intangible assets, purchase or sale of investments, such as shares or debt
securities of other companies
What is the definition of Operating Activitites?
The main day-to-day activities in a business
List some examples of Operating Activities
Sources of income, expenses, related accounts such as accounts receivable + account payable.
What are the 4 financial statements?
Statement of Income, Statement of Changes in Equity, Statement of Financial Position, Statement of Cash Flows.
What is the Statement of Income?
Reports Revenues for specific period of time.
What is the Statement of Changes in Equity?
Changes in each component of shareholders’ equity during period of time.
What is the Statement of Financial Position?
Shows assets, liabilities and shareholders’ equity at specific point in time.
What is the Statement of Cash Flows?
Shows for specific period of time, how company obtained cash and how it was used.
What is Included in the Statement of Income?
Revenues (sale of products or services, result in an inflow of assets) - Expenses (cost of assets consumed or services used to generate revenues) = Net income.
What is included in a Statement of Changes in Equity?
Common shares, beginning of period + Common shares sold - Common shares repurchased = Common shares, end of period.
