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16 Cards in this Set

  • Front
  • Back
Sole Proprietorship
Business organization owned by one person. The owner is personally liable for all debts of the business
Partnership
Business organization owned by two or more people. Each partner is personally liable for all debts of the business
Corporation
A separate entity from both a legal and accounting perspective. Owners of corporations (stockholders) are not personally responsible for debts of the corporation.
Accounting
A system of analyzing, recording, summarizing and reporting the results of a business's activities.
Separate Entity Assumption
Requires that a business's financial reports include only he activities of the business and not those of its stockholders.
Assets
Resources controlled by the company that have measurable value and are expected to provide future benefits to the company.
Liabilities
Amounts owed by the business to creditors

(notes payable: more formal, payed over a longer period of time)
(accounts payable: purchasing on credit, 50 days to pay)
Stockholders Equity
Owners' claim to the business resources
Dividends
Distributions of a company's earnings to its stockholders as a return on their investment.
Financial Statements (order of 4)
1. Income Statement (others rely on it)
2. Statement of Retained Earnings (if related earnings is $0, co. probably just opened 1st year)
3. Balance Sheet (shows health of company)
4. Statement of Cash Flows (Where CASH came from and where it went, operating activities, investing activities, financing activities.
Income Statement
Reports the amount of revenues less expenses for a period of time
Statement of Retained Earnings
Reports the way that net income and the distribution of dividends affected the financial position of the company during the period.
Balance Sheet
reports the amount of assets, liabilities, and stockholders equity for a business at A POINT IN TIME
Statement of Cash Flows
Reports the operating, investing and financing activities that caused increases and decreases in cash during the period.
General Accepted Accounting Principles (GAAP)
Rules of accounting created by the Financial Accounting Standards Board for use in the United States
International Financial Reporting Standards (IFRS)
Rules of accounting created by the International Accounting Standards Board for international use.