Blank Company is a privately held business that provides property management services to commercial buildings in Canada. Chad is the sole shareholder who also manages the day-to-day operations of the business. Chad's wife Dora taught herself how to use Quick Books and she looks after the company's bookkeeping. Once a year, Chad drops off the Income Statement and Balance Sheet that Dora prints out from Quick Books to his friend David. David has worked in public accounting but he doesn't have an accounting designation. David just takes the numbers that Dora provides and uses them to file the company's corporate tax return. Up until now, BLANK COMPANY has never prepared proper financial statements since there have never been outside shareholders and the company has reported zero liabilities. Dora has never recorded depreciation for any of the assets listed on the balance sheet. Chad has just found out that BLANK COMPANY was the successful bidder to provide property management services to a large mall. As a result, BLANK COMPANY must make a substantial investment in equipment and twenty additional employees will have to be hired. BLANK COMPANY is in the process of trying to arrange financing for the equipment from the Bank of Ontario. The Bank's credit office has informed Chad that BLANK COMPANY submit audited financial statements before any credit will be granted. Chad has approached you, A CPA, to audit BLANK COMPANY's financial statements for the year ended August 31, 2021. Dora provided print outs from Quick Books to you and has asked you to prepare the financial statements and audit them. Dora has told you that BLANK COMPANY only records revenue when they receive payment and expenses aren't recorded until they are actually paid. Chad's aunt loaned BLANK COMPANY $350,000 in 2020 which must be paid back by March 31, 2023. Dora recorded the loan as a credit to shareholder equity. Chad's aunt has the legal right to demand payment on the due date. His aunt is expected to take legal action if the note is not paid on time.

USER ORIENTATION-NEEDS OBJECTIVES Provide information: 1. Useful in investment First level: The "why" -goals and and credit decisions purposes of accounting 2. Useful in making resource allocation decisions including assessing management stewardship QUALITATIVE CHARACTERISTICS ELEMENTS A. Fundamental 1. Assets 1. Relevance 2. Liabilities (predictive and 3. Equity feedback value) 4. Revenues 5. Expenses Second level: Bridge 2. Representational 6. Gains between levels 1 and 3 faithfulness (complete, neutral, 7. Losses and free from error) B. Enhancing 1. Comparability (consistency) 2. Verifiability 3. Timeliness 4. Understandability . Economic entity . Matching . Historical cost Control Periodicity . Fair value Third level: . Revenue recognition . Monetary unit . Full disclosure The "how" - and realization . Going concern implementation Foundational Principles