Ch. 1 Role of Accounting Flashcards
profit
the difference between the amount earned from customers and the amount paid for inputs to provide goods or services to the customer
revenue
amount received for goods or services
expense
amount paid to produce the goods or service
__________ - __________ = profit
revenue - expense
examples of revenue
sales revenue, fees earned, interest revenue
examples of expense
salary expense, rent expense, utility expense
net income
the amount by which revenue exceeds expenses
net loss
the amount by which expenses exceed revenue
service business
provide services rather than products
retail business
sell products from other business to customers
manufacturing business
produce products to sell to customer
what is the objective of accounting?
to provide relevant and timely information for users to make decisions
what is a stakeholder?
a person or entity that is interested in how a business is performing
examples of stakeholders
stockholders, owners, banks/creditors, managers, employees, customers, government, IRS, community
what are stockholders/owners interested in?
how much profit the company makes
what are banks and other creditors interested in?
if the company can pay back loans/bills
what are managers/employees interested in?
if the company can pay them
what are customers interested in?
if the products are as low cost as possible
what is the government/IRS interested in?
how much money it makes because they pay taxes
what is the community interested in?
what they are doing outside the company
what are two types of stakeholders?
internal and external
examples of internal stakeholders
managers, employees, owners
examples of external stakeholders
investors, creditors, customers, government, community
