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28 Cards in this Set

  • Front
  • Back

Sole proprietor means that tax is ____ and liabilitiy is _____

Tax is personal
liability is personal

In a general partnership is and tax, liability is:

two or more people
tax is personal
liability is joint
as a partner you are 100% liable for the debt.
E.g. the debtor can go after 1 partner for 100% of the debt

If you limit the liability you form a

Limited partnership

in limited partner ship you designate

Limited partnership to 1 more people
General partnership to 1 more people

whats the difference between general and limited partner?

General has say in day to day operations, limited does not, general partners are 100% liable, limited is liable in only the amount they invest in

Corperation creates a
Tax is

a seperate legal entity
- comprised of shareholders
- seperate taxable entity

Trust is

Hold assets for someone else
Trustee (holding)
Benificiary (letting hold)

Joint venture is

Two entities, common purpose

Why do we use financial statements

Tax, Legal, Monitoring

When you prepare financial statements, you must use the ________ principle

GAAP
Generally accepted accounting principles

Cost principle is

cost principle says it is the original cost of an asset that you record on your books
when you buy a building for 250,000

Revenue principle is

revenue principle says, revenue is recognized when earned, NOT when received
- deal going on, includes deposit, subject removal date is next Friday completion is on 31st, if the deal goes through, when do you get paid? the completion date

Matching principle

Expense are recognized when incurred, not when paid (accrual accounting) (paying on credit)

Objectivity principle is

Data can be verified

Consistent principle

Keep things the same, using the same method

Fiscal period is

Accounting year, any date of the year in financial statements

Income statment is
formula is

The performance of the company over a period of time
Revenue - Expenses = net income

Balance sheet is
the formula is

"As at" certain date - company's Assets and liabilities, what they own and what they owe
Assets - Liabilities = owners equity

CA
and
CL is
what does current mean

Current Assets - inventory that well be sold within a year e.g.
Current liability - rent payment that will be up next month, payments that will be done in a year, utilities, account payable,

Non current assets are

Something that wont be sold everyday
e.g. van,

Non current liability is

something you owe, but not right now
5 million dollar mortgage

Interest expense is
can it be written off?

the cost of borrowing money, can be written off
(tax deductible)

Depreciation is

Devaluing asset overtime

CCA is

Capitol Cost Allowance (tax deductible)

Straight line depreciation is

Cost - Salvage
_____________
LIFE
Average depreciation over time

Book value is

Value - Depreciation up to date

two rules for capitol cost value

rule 1 - claim half in year 1


rule 2 - claim 0 in the final year (dispose the asset)

Cost of goods sold is

Begining invetory
+ purchase of goods for resalte
- ending inventory
________________________________
COGS