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| a business owned by one person; simple to set up and gives you control; tax advantages |
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| a business owned by two or more persons associated as partners; one individual may not have enough economic resources and a partner can bring unique skills or resources |
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| a business organized as a separate legal entity owned by stockholders; more attractive because shares of stock are easy to sell (transfer ownership) making it easy to raise funds; no personal liability |
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| the information system that identifies, records, and communicates the economic events of an organization to interested users |
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| managers who plan, organize, and run a business (i.e. marketing managers, production supervisors, finance directors, and company officers) |
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| investors (deciding to buy, hold, or sell stock), creditors (i.e. suppliers and bankers evaluating the risks of selling on credit or lending money), taxing authorities (i.e. the IRS determining whether a company complies with the tax laws), customers (interested if companies will continue to honor product warranties), labor unions (if owners can pay increased wages and benefits), and regulatory agencies (i.e. FTC if a company is operating within prescribed rules) |
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| regulations passed by Congress to reduce unethical corporate behavior; top management must now certify the accuracy of financial information and penalties for fraudulent financial activity are much more sever |
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| amounts owed to creditors in the form of debts and other obligations (i.e. note payable or bond payable) |
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| the total amount paid in by stockholders/shareholders for the shares they purchase |
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| payments of cash from a corporation to its stockholders |
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| resources owned by a business (i.e. property, plant, equipment, cash) |
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| the increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business (sales, service, and investment) |
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| the right to receive money in the near future as payment for the sale of a good or service |
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| the cost of assets consumed or services used in the process of generating revenues (i.e. ingredients, salaries, rent, utilities) |
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| the amount by which revenues exceed expenses |
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| the amount by which expenses exceed revenue |
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| a financial statement that reports a company's revenues and expenses resulting net income or net loss for a specific period of time |
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| the amount of net income retained in the corporation |
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| retained earnings statement |
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| a financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period |
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| a financial statement that reports the assets and claims to those assets at a specific point in time |
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| the owners' claim to assets |
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| basic accounting equation |
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Definition
| assets=liabilities+stockholder's equity |
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Definition
| a financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time |
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| a report prepared by corporate management that presents financial information including financial statements, a management discussion and analysis section, notes, and an independent auditor's report |
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| management discussion and analysis |
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| a sections of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations |
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| notes to the financial statements: |
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Definition
| notes clarify information presented in the financial statements and provide additional detail |
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| a report prepared by an independent outside auditor stating the auditor's opinion as the fairness of the presentation of the financial portion and results of operations and their conformance with generally accepted accounting priciples |
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Definition
| (an individual who has met certain criteria and is thus allowed to perform audits of permission |
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