Powerpoint 1 Flashcards
Accounting definition
Self proprietorship
A business owned by one person
ex. A small owner-operated barber shop
Partnership
A business owned by two or more persons associated as partners
often because indivdual lacks sufficient economic resources
ex. lawyers, artchitects, CPAs
Corporation
A business organized as a seperate legal entity owned by stockholders
Investors receive shares of stock to indicate their ownership claim
Ex. NYSE members
Most of business is done by what?
Most common business is what?
Most of business- corporation
Most common - sel proprietorshipp and partnership
External users
Creditors/lendors
Private investors
Vendors
Customers
Taxing authorities
Regulators
Internal users
Managers who plan, organize, and run a business
ex. marketing manager, production supervisor, finance director, company officer
Investors
Use accounting information to make decisions to buy, hold, or sell stock
Creditors
Use accounting information to evaluate the risks of selling on credit or lending money
external user
Specific examples of external users
Taxing authorities
Customers
Labor unions
Regulatory Agencies
Ethics in financial reporting
Regulators and lawmakers concerned that the conomy would suffer if investors lost confidence in corporate accounting due to unethical financial reporting
3 business activities
Financing
Investing
Operating
Creditors
Persons or entities to whom a company owes money
Liabilities
Amonts owed to creditors
Have the legal right to be paid according to pre-determined schedule
Common stock
Total amount paid in by stockholders for the shares they purchase
Investors have no legal right to corporate cash until claims of creditors are satisfied
Dividends
Payments to stockholders
Two financing activities
- Borrow money
- Issue (sell) shares of stock