BUS 251 Financial Accounting I - Notes from lectures
(COMPLETE SOLUTION FOR FINAL EXAM PREP) Simon
Fraser University
,Chapter 1: Overview of Corporate Financial Reporting POWER
POINT:
We need Financial Information about the companies:
• Income Statement
• Balance Sheet
• Cash Flow
Accounting is the Language of Business
Profit/Loss Revenue
Margin Capital
Earnings Cash Flow
Forecast/Budget Liquidity
Costs ROI/ROE/ROA
EPS Stock/Shares/Options
Dividend Bonds
Users of Financial Accounting
• Investors
• Creditors
• Management
• Government
Forms of Organizations what we are “reporting” on
Distinguishing Corporation Proprietorship Partnership
, Feature
Number of owners Can be a single owner Single Owner Multiple owners
or multiple owners
Separate Yes, personal assets of No, personal assets No, partners’s
legal entity? shareholders are not at of owner are at risk personal assets are
risk in the event of legal in the event of legal at risk in the event
action against company action of legal action
Owner(s) Only to extent of Yes Yes
responsible investment
for debts of
the business
Taxed? Yes, taxed separately No, profits taxed in No, profits taxed in
hands of owner hands of owners
Costs to establish Most expensive Least expensive Moderately
expensive
Cost to maintain Most expensive Least expensive Moderately
expensive
Entity: Corporations
• Separate legal entity
• Limited liability of shareholders
• Issue shares
• Public or private
• Owned by shareholders
• Double taxation: Corporation is taxed as are the shareholder when they receive the
dividends
• Ease of transfer of ownership
Entity: Governments/Crown Corps
• Governments raise and spend billions of dollars every year
, • Financial reporting by governments is an important source of accountability
Financial Reporting and Financial Statements
Annual Reports
• Reports the results of the company’s activities during the year - required by public
companies
1. Financial Statements which include Notes to the Financial Statements
2. MD&A (Management Discussion and Analysis)
3. Auditor’s opinion
• Public companies also produce quarterly Financial Statements & Notes to the Financial
Statements
Financial Reporting
The components of the Financial Statements include:
1. Statement of Income/Income Statement
2. Statement of Financial Position/ Balance Sheet
3. Statement of Cash Flows/ Cash Flow Statement
4. Statement of Changes in Equity
5. Notes to the Financial
Statements Textbook
Corporation is the most effectively limits the risk of ownership
What is Financial Accounting?
Financial accounting: is the process by which information on the transactions of an
organization is captured, analyzed, and used to report to decision makers outside of the
organization’s management team, refer to external financial reporting due to its focus on
providing accounting info to external decision makers
(COMPLETE SOLUTION FOR FINAL EXAM PREP) Simon
Fraser University
,Chapter 1: Overview of Corporate Financial Reporting POWER
POINT:
We need Financial Information about the companies:
• Income Statement
• Balance Sheet
• Cash Flow
Accounting is the Language of Business
Profit/Loss Revenue
Margin Capital
Earnings Cash Flow
Forecast/Budget Liquidity
Costs ROI/ROE/ROA
EPS Stock/Shares/Options
Dividend Bonds
Users of Financial Accounting
• Investors
• Creditors
• Management
• Government
Forms of Organizations what we are “reporting” on
Distinguishing Corporation Proprietorship Partnership
, Feature
Number of owners Can be a single owner Single Owner Multiple owners
or multiple owners
Separate Yes, personal assets of No, personal assets No, partners’s
legal entity? shareholders are not at of owner are at risk personal assets are
risk in the event of legal in the event of legal at risk in the event
action against company action of legal action
Owner(s) Only to extent of Yes Yes
responsible investment
for debts of
the business
Taxed? Yes, taxed separately No, profits taxed in No, profits taxed in
hands of owner hands of owners
Costs to establish Most expensive Least expensive Moderately
expensive
Cost to maintain Most expensive Least expensive Moderately
expensive
Entity: Corporations
• Separate legal entity
• Limited liability of shareholders
• Issue shares
• Public or private
• Owned by shareholders
• Double taxation: Corporation is taxed as are the shareholder when they receive the
dividends
• Ease of transfer of ownership
Entity: Governments/Crown Corps
• Governments raise and spend billions of dollars every year
, • Financial reporting by governments is an important source of accountability
Financial Reporting and Financial Statements
Annual Reports
• Reports the results of the company’s activities during the year - required by public
companies
1. Financial Statements which include Notes to the Financial Statements
2. MD&A (Management Discussion and Analysis)
3. Auditor’s opinion
• Public companies also produce quarterly Financial Statements & Notes to the Financial
Statements
Financial Reporting
The components of the Financial Statements include:
1. Statement of Income/Income Statement
2. Statement of Financial Position/ Balance Sheet
3. Statement of Cash Flows/ Cash Flow Statement
4. Statement of Changes in Equity
5. Notes to the Financial
Statements Textbook
Corporation is the most effectively limits the risk of ownership
What is Financial Accounting?
Financial accounting: is the process by which information on the transactions of an
organization is captured, analyzed, and used to report to decision makers outside of the
organization’s management team, refer to external financial reporting due to its focus on
providing accounting info to external decision makers
