Libby2ce_Ch 03——北美会计原理.pptVIP

Financial Accounting Robert Libby, Patricia A. Libby, Daniel G. Short, George Kanaan, Maureen Gowing Chapter 3 Business Background Business Background The Operating Cycle The operating cycle is the time it takes for a company to pay cash to suppliers, sell those goods and services to customers, and collect cash from customers. The Operating Cycle Underlying Accounting Assumptions The Periodicity Assumption To meet the needs of decision makers, we report financial information for relatively short time periods (monthly, quarterly, annually). Elements on the Classified Income Statements Elements on the Classified Income Statements Elements on the Income Statement Elements on the Income Statement Elements on the Income Statement Asset Turnover Ratio Asset Turnover Ratio Cash Basis Accounting Accrual Accounting Principles Affecting Income Determination Revenue Principle Matching Principle Cost Principle The Revenue Principle Recognize revenues when . . . The earnings process is complete or nearly complete. An exchange transaction takes place.  Collection is reasonably assured. The Revenue Principle The Revenue Principle The Matching Principle Resources consumed to earn revenues in an accounting period should be recorded in that period, regardless of when cash is paid. The Matching Principle The Matching Principle Return on Assets (ROA) Return on Assets (ROA) The Expanded Transaction Analysis Model Transaction Analysis Rules Focus on Cash Flows End of Chapter 3 Copyright ? 2006 McGraw-Hill Ryerson . 3-* Second CANADIAN edition Operating Decisions and the Income Statement Goals Plans Strategies Measurable indicators Businesses develop . . . The goals include elements of income. What business activities affect the income statement? How are these activities recognized and measured? How are these activities reported on the income statement? Purchase products or supplies on credit. Deliver product or provide service to customers on credit. Pay suppliers