Introduction Flashcards
Define operating information systems
Collecting, measuring, recording; summarising and communicating the results of transactions to users to make financial or economic decisions.
What do financial statements provide?
Information regarding the financial position of an entity and any changes. Furthermore, shows the performance in an entity.
What are the 3 points in the language of business?
1) Measure business activities
2) Process data into reports.
3) Communicate results to users.
Factors of financial accounting:
Investors, creditors, external users, public and government.
Factors of managerial accounting:
Budget, forecast, managers and internal users.
What is ‘unlimited life’ equal to?
Unlimited life = loads of owners/partners = business never dying
Sole Trader
Small business retail stores and professional service providers. The proprietor (one owner) controls the life of the business and is personally liable for business debts.
Partnership
Not a tax paying entity, there are two or more owners and the income passes through to partners. Governed by an agreement and has unlimited liability. The general partners are personally liable for business debt; limited partners aren’t.
Companies PLC & LTD
Formed under state law and are legally distinct from its owners. Double taxation: corporate income and distribution of earnings (dividends). Board of directors manage company as there are generally many owners (shareholders). Shareholders are not personally liable for business debt.
Public limited company
They offer shares to the public on recognised share exchanges (listed companies).
Limited company
Privately owned, either by family or a small group of investors. Shares may be sold privately but aren’t publicly sold no exchanges.
Business taxation
Income flows directly to the sole owners tax return where he or she pays self-employment and income tax.
Government regulation
Minimal regulation is an advantage.
