Acct 311

Front 1

Sole Proprietorship

Back 1

Individually owned, inexpensive to start, legally owner-business linked.

Front 2

Partnership

Back 2

Same as Proprietorship but with >1 owner.

Front 3

Corporation

Back 3

Separate from owner (pay their own taxes), issues shares to investors (shareholders), expensive to start, shareholders can only lose their investment. Can be public or private. Public issue shares to a few individuals and public sell on stock market.

Front 4

Accounting

Back 4

System to analyze, record, and summarize results of business activities for decision makers to see.

Front 5

Private Accounting

Back 5

Hired by the firm, for the firm.

Front 6

Public Accounting

Back 6

3rd party that contracts accounting work for multiple businesses

Front 7

Managerial Accounting Reports

Back 7

For internal users (ex. managers) to run the company

Front 8

Finacial Accounting Reports

Back 8

For external users to evaluate the company. For example, creditors (banks, suppliers), investors (shareholders), and other (customers, government...).

Front 9

What are the 4 financial accounting reports?

Back 9

1. Income Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flow

Front 10

Accounting Equation

Back 10

Assets = Liabilities + Shareholders' Equity

Front 11

Define separate entity assumption

Back 11

Corporate finances only include the business activites (not personal)

Front 12

Define assets

Back 12

Economic resources owned by the business (supplies, equipment, cash, etc.)

Front 13

Define liabilities

Back 13

Amounts the company owes to creditors (notes payable, accounts payable, wages payable, taxes payable, etc.)

Front 14

Define shareholders' equity

Back 14

Owners claim on business:
1. Contributed capital (initial investment)
2. Retained earnings (accumulated profits)

Front 15

Income Statement Equation and Order

Back 15

Profit (net income) = Revenues - Expenses

Order:
Revenue - most relevant 1st
Expenses - highest to lowest, except Income Tax Expense is last.

*Reports finances occurring in just that period
*Considered temporary
*Records for a period "For the Month Ended..."

Front 16

Define dividends

Back 16

Profits collected in the Retained Earnings account until a decision is made to pay the shareholders what is called a dividend. This is not seen as an expense to the company.

Front 17

Retained Earnings Equation

Back 17

Retained earnings = previous retained earnings + net income - dividends

Front 18

Balance Sheet Equation and Order

Back 18

Assets = Liabilities + Shareholders' Equity

Order:
Assets - listed in order of liquibility
Liabilities - listed in order to be paid off

*Considered permanent
*Records for a set date

Front 19

Define cost principle

Back 19

Assets are initially reported at their original cost to the company.

Front 20

Define the Statement of Cash Flow

Back 20

Reports cash changing hands (operating, investing, and financing)

Front 21

What is the relationship between the statements?

Back 21

Income Statement: net income -> Statement of Retained Earnings: retained earnings -> Balance Sheet

Front 22

What side of the accounting equation are receivable accounts on?

Back 22

Asset

Front 23

What side of the accounting equation are payable accounts on?

Back 23

Liability