18 terms

ACCNT 280 Chapters 1 and 2

STUDY
PLAY

Terms in this set (...)

Sole Proprietorship
Simple to establish
Owner controlled
Tax advantages
Limited lifespan (if you die so does ur business)
Simple to establish
Shared Control
Tax advantages
Limited Lifespan
Broader skills and resources
Partnership: agreement to share income
Corporation (Separate legal person)
Easier to transfer ownership
Easier to raise funds
No personal liability
Unlimited lifespan
Internal Users
Finance
Marketing
Human Resources
Management
External Users
Vendors
Investors
Creditors
Ex: customers, IRS
Recent Financial Scandals
Eron, WorldCom, HealthSouth, AIG
THE THREE PRINCIPALS TYPES OF BUSINESS ACTIVITY
1. Financing Activities

2. Investing Activities

3. Operating Activities
Financing Activities
1. Borrowing Money (debt)

2. Issuing (selling shares of stock for cash (equity)
Borrowing Money (debt)
Amounts owed are called liabilities.

Party to whom amounts are owed are creditors.

Notes payable and bonds payable are different types of liabilities.
Issuing (selling) shares of stock for cash (equity)
Common stock is the term used to describe the amount paid by stockholders for shares they purchase.

Payments to stockholders are called dividends.
Assets
resources owned by a business
Operating Activities
Once a business has the assets it needs, it can begin its operations.

Starting with:
- Revenues
- Inventory
- Accounts receivable
- Expenses
- Liabilities
- Net Income
- Net Loss
Accounts Receivable
Right to receive money from a customer as the result of a sale
Expenses
cost of assets consumed or services used
Liabilities arising from expenses include:
- accounts payable
- interest payable
- wages payable
- sales taxes payable
- income taxes payable
Investing Activities
purchasing of resources a comapny needs to operate...
such as computers, delivery trucks, furniture, and buildings
Accounting Information System
keeps track of the results of each of these business activities.
1. Cost of renting property

2. Truck purchased

3. Notes payable

4. Issuance of ownership shares

5. Amount earned from providing service

6. Amounts owed to suppliers
1. Expense

2. Asset

3. Liabilties

4. Common Stock

5. Revenue

6. Liabilities