Chapter 1. Flashcards
(23 cards)
TYPES OF BUSINESS 1.
Sole Proprietorship:
1 Owner
Unlimited liability
Simple
Limited Life
TYPES OF BUSINESS 2.
Partnership:
2 or more owners Unlimited liability Shared control/profits limited life Tax advantage Simple
TYPES OF BUSINESS 3.
Corporation:
Several owners (shareholders)
Public or private
Limited liability
Easy to transfer ownership/raise funds
Three principle types of business activity
Finance
Investment
Operating
Liability
Amount owed
Creditors
The amount of debt owed to
Common Stock
amount payed by stockholders for shares they purchase
Dividends
Payments to stockholders
Assets
resources owned by a business (equipment, cash…etc)
Revenue
Increase in assets or decrease in liabilities resulting from the sales of good on performance of a service
Supplies
Assets used for day-to-day operations
inventory
Goods available for sale to customers
Accounts Receivable
Right to receive money from a customer as the result of a sale
Expenses
cost of assets consumed or services used
Net Income
When revenue exceeds expenses
Net Loss
When expenses exceed revenue
Four Financial Statements
Income Statement
Retained Earnings
Balance Sheet
Cash Flow Statement
Internal Users Of Accounting
Finance
Marketing
Human Resources
Management
External Users of Accounting
Creditors
Investors
Income Statement
Revenue - Expenses = Net Income
Retained Earning Statement
Showing how much of revenue is kept after dividends
Balance Sheet
Assets = Liabilities + Stakeholders Equity
Two Primary Sources of Outside Funds
