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Question 1

Financial statements

Answer 1

Business documents that companies use to report the aggregated results of their activities to various user groups (financial position, operating performance, cash flows, etc…)

Question 2

3 major forms of business

Answer 2

Proprietorship, partnership, corporation

Question 3

What is different from a corporation and a proprietorship/partnership?

Answer 3

Shareholders own, separate legal existence

Question 4

Liabilities

Answer 4

Amounts owed to others

Question 5

Creditors

Answer 5

Pray to whom amounts are owed

Question 6

Common shares/preferred shares

Answer 6

Amounts paid by investors for shares in a company

Question 7

Dividends

Answer 7

Periodic payments to shareholders to reward them for holding shares

Question 8

Assets

Answer 8

Resources that we own that have a future value

Question 9

Expenses

Answer 9

Cost of operating the business (includes cost of goods sold, selling expenses, marketing expenses, administrative expenses, taxes…)

Question 10

Net income (profit)

Answer 10

Revenues - Expenses

Question 11

Supplies

Answer 11

Assets used in day to day operations (rather than sold to customers) eg. oil in machines

Question 12

Inventory

Answer 12

Goods available for sale to customers

Question 13

Accounts receivable

Answer 13

Right to receive money in the future from a customer as a result of a sale (customer owes you money, like credit card sale)

Question 14

Account payable

Answer 14

Purchasing goods from suppliers and paying later (you owe supplier money)

Question 15

Interest payable

Answer 15

Interest owing on debt outstanding

Question 16

Wages payable

Answer 16

Salaries owing to employees

Question 17

Income taxes payable

Answer 17

Income tax owed to the CRA

Question 18

Sales tax payable

Answer 18

GST/HST/PST owed to the government

Question 19

What are the 4 basic financial statements

Answer 19

Income statement, statement of changes in equity, balance sheet, statement of cash flow

Question 20

Give 3 examples of business stakeholders

Answer 20

Employees, unions
Management (internal users)
Auditors, federal and provincial gov departments, legislators
Potential investors, customers
Stock analysts, brokers…

Question 21

What are shareholders?

Answer 21

Investors who have invested resources in the company in exchange for a share of its ownership.

Question 22

Creditors

Answer 22

Those who lend money or otherwise extend credit to a company rather than invest in it directly as investors do.

Question 23

What is a public company?

Answer 23

Public (listed): traded publicly, the shares are listed on a public stock exchange

Question 24

What are the 2 ways that shareholders can generate return from investing in a company? Note: they hold shares in a company

Answer 24

1. Receive dividends (payments made by a company that distribute a portion of the company’s profits to shareholders.)
2. Capital appreciation (sell their shares to other investors for more than they paid for them.)

Question 25

What is the intention of the statement of income (statement of operations, net earnings, earnings, profit, loss)

Answer 25

Present the results of the company’s operating activities for a month, quarter, or a year.

Question 26

Profit (eqn, defn, synynoms)

Answer 26

Income - expenses. Th sum of the company’s operating activities. Net income, net earnings, earnings.