Mod 1 Business Flashcards
Sole Proprietorship
Business that is owned (and usually operated) by one person
Partnership
A relationship between 2 or more individuals who join together to carry on a trade or business
General Partner
A person who shares responsibility for operating a business, and unlimited liability for the debts of the business
Limited Partner
A person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership
Corporation
An artificial person created by law with most of the legal rights of a real person, including the rights to start and operated business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts
Public Corporation
A corporation whose shares are widely held and available to the general public
Private Corporation
A coporation whose number of shareholds is limited; normally resricts the transfer of shares to thrid parties, and shares do not trade on a recognized stock exchange
Pass-Through Taxation
Occurs when a owner’s share of busniess profit is reported on his or her individual tax return, as in an unincorporated business (sole proprietorship or partnership)
Corporation (dual) Taxation
Occurs when profits of a business are taxed at the entity level before profits are distributed to owners; distributions are reported on the owners’ individual tax returns as dividends and are taxed a second time
Unlimited Liability
A legal concept that holds a business owner personally responsible for all the debts of the business
Limited Liability
A feature that limits each owner’s financial liability to the amount of money that she or he has invested in the business
Entrepreneurial Spirit
Being aware of entrepeneurial activity, perceiving there are good opportunities, and believing in your ability to start a business
Intrapreneurs
Employees who bring an entrepreneurial spirit to their organization
Business Plan
A wtitten document that describes the opportunity, goals, and plans for a business
Business Model
Explains hwo the business will make money
Angel Investor
Private individuals who invest money in exchange for ownership in a company
Venture Capital (VC)
Companies that invest money in high-growth companies that have the potential to become large and successful
Crowdfunding
When entrepreneurs invite people to contribute to a business or project, usually via an online platform
Franchise
A licence to operate an individually owned business as if it were part of a chain of outlets or stores.
Franchising
The actual granting of a franchise
Franchisor
An individual or organization granting a franchise
Franchisee
A person or organization purchasing a franchise
Accounting
The process of collecting, analyzing, and reporting financial information
Managerial Accounting
Provides information for managers within an organization to make decisions about a company’s financing, investing, marketing, and operating activities
Financial Accounting
Provides information for people outside an organization through the generation of standardizing financial statements
Generally Accepted Accounting Principle (GAAP)
The financial accounting rules, standards, and usual practices followed by accountants in Canada when preparing financial statements until Jan 2011
International Financial Reporting Standards (IFRS)
A set of globally accepted accounting standards adopted in Canada on Jan 1 2011 for public companies and those private companies that chose of adopt them
Accounting Standards for Private Enterprises (ASPE)
Accounting standards similar to the former Canadian GAPP for provide privates companies (Unless the private companies choose to use IFRS)
Balance Sheet (or Statement of Financial Position)
A financial statement that provides a snapshot of a company’s financial position by stating assets, liabilities, and owner’s equity
Income Statement (or statement of income)
A financial statement that provides a summary of how much a company earned over a period of time; summarizes revenue, expenses, and net income (or loss)
Statement of Cash Flows (or Cash Flow Statement)
A financial statement that illustrates how the company’s operating, investing, and financing activities affect cash over a period of time
Cost Of Goods Sold (COGS)
The cost of producing or purchasing products for sale; typically varies directly with sales volume or production volume
Operating Expense
Ongoing business expenses such as rent, salaries, utilities, and marketing expenses’ these often do not change in direct relation to changes in sales volume
Financial Ratio
A number that shows the relationship between 2 elements of a company’s financial statements; allows for a fairer comparison between current financial results and results form previous periods or industry competitors
Return On Sales
A financial ratio that measures profitability by dividing net income by revenue
Current Ratio
A financial ratio that measures liquidity by dividing current assets by current liabilities
Debt-To-Equity Ratio
A financial ratio that measures leverage by dividing total liabilities by owners’ equity
