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22 Cards in this Set
- Front
- Back
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What distinguishes a service company from a merchandising or manufacturing company?
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Service companies don’t produce tangible things
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How is a merchandising company different from a manufacturing company?
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A merchandising company purchase goods for resale (Amazon.com), Manufacturing make their products themselves. They both sell products to their customers
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What is the difference between management and financial accounting?
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Management accounting is internal and private:helps managers plan and operate, financial accounting is available to the public and analyze financial reports( follow GAAP
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What are GAAP?
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They are accepted principles procedures and practices, common set of rules, must be followed in financial reports
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How do financial reports help external users?
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They need the numbers to make a decision about the company
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What is a sole proprietorship? What is meant by the terms unlimited liability and limited life as they appear to a sole proprietorship?
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SP is a company owned by one person who is the sole investor of capital into the company. UL is a us law that says an owner of a sp must assume personal responsibility for debts from the company, LLife is when the owner changes so does the company
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What is a partnership? What is meant by the terms limited life, joint ownership, agent, and unlimited liability?
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A partnership is 2+ owners. LL applies because the partnership terminates when partners change or die, JO is individual assets that are contributed become the joint assests of the partnership, agent is a person who has the authority to act for the other, UL is when partners could be forced to use personal assets to liquidate company debts
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What is a corporation? What is meant by the terms capital stock, limited liability, and double taxation?
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A corporation is a separate legal entity that is independent of its owners and run by a board of directors, CS is the stock of the company that owners receive shares of, LL is the debts they owe to creditors, DT is if some of the after tax income is distributed to stockholders on dividends ,the stockholders again may be taxed
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What is the secondary equity market?
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Where investors buy the stock of corporations from other investors rather than from the corporations. New York, Tokyo, London Stock Exchanges
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What is the FASB and IASB’s joint conceptual framework, and what is the primary purpose of financial accounting information?
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A set of concepts that provides a logical structure for financial accounting and reporting, provides info for external users
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Relevant accounting information, how it relates to materiality?
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Has capacity to influence a user’s decision, materiality (money) is relevant
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0. Reliable accounting info, how it relates to validity?
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Capable of being verified, valid shoes a realistic image of what it represents
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What is the owner’s equity of the corporation called, and into what two sections is it separated on a corporations balance sheet?
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Called stockholder’s equity, separated into contributed capital and retained earnings
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What is included in contributed capital and retained earnings on the balance sheet?
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CC has par value and paid in capital, RE reports the total lifetime net income
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What amounts are included in a corporations common stock and additional paid-in capital accounts?
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The par value is included
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What is reported in the income from continuing operations of a corporation’s income statement?
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Reports a corporation’s revenues and expenses that resulted from its ongoing operations
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What is the last item shown on a corporation’s income statement, and how is it computed?
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Earnings per share- Net Income/Avg number of common shares
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What is included in a corporation’s annual report?
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The financial statements of the past two years
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What is included in the management’s discussion and analysis (MD&A) section of a corporation’s annual report?
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A discussion about industry and market trends, plans for improvement
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Describe the three main functions of a business plan.
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Helps an entrepreneur to visualize and organize the company and its operations. Serves as a benchmark against which the entrepreneur can later measure the actual performance of a company. Helps an entrepreneur obtain the financing that new and growing companies often need.
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If the total variable cost per unit increases while the selling price per unit, the fixed costs, and the sales volume remain the same, how would you expect the change in fixed costs to affect profit? The breakeven point?
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Increases as volume increases
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If the total fixed cost per unit increases while the selling price per unit, the fixed costs, and the sales volume remain the same, how would you expect the change in fixed costs to affect profit? The breakeven point?
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Price remains same regardless of volume
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