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ACC 201 Ch.1

corporation
a business enterprise that raises money by issuing shares of stock, easy to transfer ownership, easier to raise funds, no personal liability
creditor
a party to whom a business owes money, cars salesmen, bank ect..
accounts receivable
right to receive money from a customer in the future from a sale
partnership
a business that is owned jointly by two or more people but does not issue stock, simple to establish, shared control, broader skills and resources, tax advantages
stockholder
a party that invests in common stock
common stock
the portion of a stockholders equity that results from receiving cash from investors
accounts payable
obligations to suppliers of goods
auditor’s opinion
an expression about whether financial statements conform with generally accepted accounting principles
accounts payable (what is it)
liability, operating activity
accounts receivable (what is it)
asset, operating activity
equipment, property, plant
asset, investing activity
sales revenue
revenue, operating activity
service revenue
revenue, operating activity
inventory
asset, operating activity
mortgage payable
liability, financing activity
supplies expense
expense, operating activity
rent expense
expense, operating activity
salaries and wages expense
expense, operating activity
retained earnings
stockholders equity
cost of goods sold
expense
cash
asset
notes payable
liability
long-term debt
liability
net sales
revenue
common stock
stockholders equity
sole proprietorship
a business owned by one person, simple to set up and gives you control over the business, tax advantages
internal users
managers who plan, organize, and run a business (human resources, finance, marketing, management
external users
taxing authorities, customers, labor unions, creditors, investors, regulatory agencies. internal users use them to make decisions to buy, hold, or sell stock
sarbanes-oxley act of 2002
congress passed to reduce unethical corporate behavior and decrease the liklihood of future corporate scandals
all businesses are involved in 3 activites
financing, investing, operating
accounting info system
keeps track of the results of each of these businesses
financing activities
borrowing money (liabilities, creditors) and issuing shares of stock (dividends)
investing activities
purchasing of resources a company needs to operate (trucks, computers, buildings, furniture. all called assets- resources owned by a business
operating activities
revenues, inventory, accounts receivable. expenses, liabilities, net income, net loss
revenues
amounts earned from the sale of products (sales, service, interest revenues)
inventory
good available for sale to customers
expenses
cost of assets consumed or services used (cost of goods sold, selling, marketing, administrative interest, income taxes)
net income
when revenues exceed expenses
net loss
when expenses exceed revenues
income statement
reports revenues and expenses for a specific period of time. either will have a net income or net loss
retained earnings statement
shows amounts and causes of changes and time period is same as income statment
balance sheet
reports assets and claims to assets at a specific point in time. list assets first followed by liabilities and stockholders equity
assets =
liabilities + stockholders equity
management discussion and analysis (MD&A)
covers the companies ability to pay near-term obligations, its ability to fund operations and expansion and its results of operations.
cash received from customers
operating activity
dividends paid to stockholders
financing
cash received from issuing new common stock
financing
cash paid to suppliers
operating
cash paid to purchase new building
investing

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