chapter 1 Flashcards

1
Q

Sole proprietorship

A

A business owned by one person

simple to set up and gives control

more favorable tax treatment

More liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Partnership

A

A business owned by two or more persons

Simple to establish

Broader skills and resources

Tax advantages

More liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Corporation

A

A business organized as a seperate legal entity owned by stockholders

Easier to transfer ownership

Easier to raise funds

No personal liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Accounting

A

The information system that identifies, records, and communicates the economic events to interested users

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Internal users

A

Managers who plan, organize, and run a business

ex. marketing manager, production supervisor, comapny officer, finance director

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

External users

A

Investors

Creditors

Taxing authorities

Customers

Labor unions

Regulatory agencies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Investors

A

use accounting info to make decisions about stocks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Creditors

A

use accounting info to evalulate the risks of selling on credit or lending money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Taxing authorities

A

want to know whether a comapny is following tax laws

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

creditors

A

people to whom money is owed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Bonds payable

A

Debt securities sold to investors that must be repaid at a particular date some years in the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Liablities

A

Amounts owed to creditors-in the form of debt and other obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

common stock

A

the total amount paid in by stockholders for the shares they purchase

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Dividends

A

Payments to stockholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

assets

A

Resources owned by a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Revenue

A

The increase in assets resulting from the sale of a product or service

17
Q

Inventory

A

Goods available for future sales to customers

18
Q

Account receivable

A

The right to receive money in the future

19
Q

Expenses

A

The cost of assets consumed or services used in the process of generating revenues

20
Q

Net income

A

When revenue exceeds expenses

21
Q

Net loss

A

When expenses exceed revenues

22
Q

income statement

A

Reports the success or failure of the company’s operations for a period of time

23
Q

Retaind earnings

A

The net income retained in the corporation

24
Q

Retained earnings statement

A

Shows the amounts and causes of changes in retained earnings during the period

25
Balance sheet
Reports assets and claims to assets at a specific point in time
26
Stockholders' equity
Claims of owners
27
Basic accounting equation
assets = liabilities + stockholders' equity
28
statement of cash flows
provides financial information about the cash receipts and cash payments of a business for a specific period of time
29
Anual report
Provided by shareholders by publicly traded companies including financial statements
30
Management discussion and analysis (MD&A)
Covers the companies ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations
31
Notes to the financial statements
Clarify the financial statements and provide additional detail
32
Auditor's report
States the auditor's opinion as to the fairness of the presentation of the financial position of the company
33
auditor
an accounting professional who conducts an independent examination of a compnay's financial institutions
34
unqualified opinion
If the auditor is satisfied that the financial statements provide a fair representation of the company's financial position and is accepted in accounting principles
35
Certified Public Accountant
An individual who has met certain criteria and is thus allowed to perform audits of corporations
36
Sarbanes-Oxley Act
Regulations passed by Congress in 2002 to try to reduce unethical corporate behavior
37