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
