1. Learning Objectives Understand the Business –LO1 Describe various organizational forms and types of business decision makers. Study the accounting methods –LO2 Describe the purpose, structure, and content of the four basic financial statements. Evaluate the results –LO3 Explain how financial statements are used by decision makers. –LO4 Describe factors that contribute to useful financial information. Review the chapter 1 © McGraw-Hill Ryerson. All rights reserved.

2. Generally Accepted Accounting Principles (GAAP) –Rules of accounting approved by the Canadian Institute of Chartered Accountants for use in Canada –Can be used by private enterprises International Financial Reporting Standards (IFRS) –Rules of accounting created by the Internal Accounting Standards Board (IASB) for international use –Must be used by publicly accountable profit- oriented enterprises 2 Useful Financial Information LO4 © McGraw-Hill Ryerson. All rights reserved.

3. The main goal of both IFRS and ASPE is to ensure that companies produce financial information that is useful in making decisions. 3 Canadian Generally Accepted Accounting Principles (GAAP) International Financial Reporting Standards (IFRS) Publicly accountable profit-oriented enterprises Accounting Standards for Private Enterprises (ASPE) Private enterprises LO4 © McGraw-Hill Ryerson. All rights reserved.

4. Useful financial information must be: – Relevant and a faithful representation of the business – Comparable, verifiable, timely, and understandable Elements to be measured and reported are: – Assets, Liabilities, Shareholders’ Equity, Revenues, Expenses, Dividends Concepts for measuring and reporting are: – Assumptions: Unit of Measure, Separate Entity, Going Concern, Time Period – Principles: Cost, Revenue Recognition, Matching, Full Disclosure – Exceptions: Cost-Benefit, Materiality, Industry Practices 4 LO4 © McGraw-Hill Ryerson. All rights reserved.