chapter 1 review questions Flashcards
external users
do not dreictly run org and have limited access to its acct info.
example of external users
lenders, shareholders, boards
internal users
directly manage org operations.
example of internal users
ceo, and other managerial employees
private accounting
acct employees working for business
oublic acct
offering audit, tax, and advisory services to others
what is fraud triangle
three factors that push a person to commit fraud
what makes up fraud triangle
opportuity
pressure
rationalization
opportunity
must be able to commit fraud with low risk of getting caughtp
pressure
must feel pressure or have incentive to commit fraud
rationalization
justifies fraud or does not see its criminal nature
common business entities
-sole propietership
partnership
corporation
-LLC
sole propietership
-1 owner
-no additional business income tax
-unlimited liability
-not a separate legal entity
partnership
-2 or more
-no additional income tax
-unlimited liability (partners jointly liable)
-not a separate legal entity
corporation
-shareholders by selling stock
-additoinal corporate income tax
-limited liability (shareholders not liable cor corporate acts)
-seperate entiity with same rights
LLC
-members
-no additional income tax
-limited liabilities
assets
resouces a company owns or controls that are expected to yield future beneifts
liabilities
creditors’ claim on assets
equity
shareholders claim on assets
what does equity consist of
+common stock
-dividends
+revenues
-expenses
accoutning eq
assets = liabilities + equity
layout of income ststaement
revenues - expenses = net income
layout of statement of retained earnings
beg. reatined earnings + net income - dividends = end. retained earnings
layout of balance sheet
assets = liabilities + equity
the layout of the statement of cash flows
+/- operating CF
+/- investing CF
+/- financing CF
= changein cash
