Ch.2 Accounting Fundamentals

Question 1

Cash-based acctg system

Answer 1

revenues/expenses recognized when received/paid

Question 2

Accrual based acctg system

Answer 2

Accrual-based accounting records events when they occur rather than waiting for the cash flow or doesnt matter when the cash came in just think of what yr the job is to be done

• a system that tracks a company’s true financial position, as it captures money that is owed to the company and money that it owes others
• more complicated than cash accounting
• required by Canadian GAAP

Question 3

Statement financial position - BS

Answer 3

the assets, liabilities, and equity for the company as at a single point in time

Question 4

The statement of profit or loss and comprehensive income (IS = ASPE ONLY)

Answer 4

revenue and expenses and calculates the net earnings for the period
- IFRS, the section for other comprehensive income items is included in the statement of comprehensive income.

Question 5

Statement of changes in equity

Answer 5

• reconciles the beg and end balance for line items included in equity, such as share capital, retained earnings, reserves, and non-controlling interest
• ASPE=only statement of RE=reconcile beg and end RE

Question 6

Statement of cash flows

Answer 6

nature of the entity’s cash flows for the period: operating, investing, or financing

Question 7

Prepaid expenses (eg. insurance)

Answer 7

Whatever amount is left at the end of the yr for future amounts (if any amount occurred this yr deduct it)