Intermediate Financial Accounting I
Chapter 1: The Canadian Financial Reporting Environment
Financial accounting is the process that culminates in the preparation of financial reports that cover the entity’s business activities and that are used by both internal and external parties.
Major financial statements include:
- Statement of financial position
- Statement of income/comprehensive income
- Statement of cash flows
- Statement of changes in equity + Note Disclosures
Financial reporting aids users in the allocation of capital
The accounting profession has the responsibility of measuring a company’s performance accurately, fairly, and on a investor timely basis. These measurements enable investors and creditors to compare the income and assets employed by companies. Investors can then assess the relative risks and returns associated with companies.
An effective process of capital allocation is critical to a healthy economy. Also, unreliable information leads to poor capital allocation.