Topic 2: Types of Businesses Flashcards
What is Income Statement?
-The Income Statement reports the net profit or loss for a specific period of time.
-Its purpose is to show how profitable a company is.
What is Statement of Changes in Equity Statement?
-The Statement of Changes in Equity Statement gives details about the movement of owner’s equity over a period of time.
-Its purpose is to explain changes in retained earnings between the prior and current balance sheet dates.
What is Balance Sheet?
-The Balance Sheet provides a snapshot of the financial position of a business or organization at specific moment in time.
-Its purpose is to demonstrate a company’s financial position and its solvency or ability to meet long term financial obligations.
What is The Statement of Cash Flows?
-The Statement of Cash Flows shows how cash is moved around the business or organization during a specific time period.
-Its purpose is to display cash inflows and cash outflows from activities such as operating, investing, and financing.
What are the classifications of businesses by Business Objectives?
- Non-profit Businesses
- Profit Businesses
What are the classifications of businesses by Trade?
- Manufacturers
- Merchandising
- Service
What are Manufacturers?
Manufacturers are those that make a product. They use labour and machinery to turn materials into a product.
What are Merchandising Companies?
Merchandising Companies are those which sells products but do not make products. Merchandising companies are broken up into RETAILERS and WHOLESALERS
What are Service entities?
Service entities are those that do not sell a physical product but instead provide services to their customers.
What are the classification of businesses by Structure?
- Sole Proprietorship
- Partnerships
- Companies
What is Sole Proprietorship?
Sole Proprietorships are businesses owned by only one person.
What are Partnerships?
Partnerships are businesses owned by two or more persons who contribute resources into the entity.
What are Companies?
Companies are businesses that have a separate legal personality from its owners.
How is Revenue brought in? (context of Sheng Shiong supermarkets)
Through the sale of their goods displayed at the various supermarkets
What is Revenue?
Income from sale of goods or services or other capital/assets associated with the main operations before deducting expenses.
