Types of business - ANSWER sole proprietorship, partnership, limited liability corp (llc), corp
Proprietorship - ANSWER business owned by one person
Partnership - ANSWER business owned and controlled by two or more people who have
entered into a written agreement
Limited liability corporation - ANSWER type of business with limited liability for the owners
(don't pay corp income tax) ---business liable for debt
Corporation - ANSWER business owned by stockholders who share in its profits but are not
personally responsible for its debts
Who pays taxes in the type of businesses? - ANSWER sole prop: no taxes (owner pays)
Partnership: no taxes (report to IRS)
Llc: no taxes
Corp: pays taxes
, Equity - ANSWER what's left over, insiders
Revenue - ANSWER inflow ---resources, increase equity/earned by selling to customers
Accounting - ANSWER info system that measures business activities, processes info into
reports/fin statements and communicates the results to decision makers
Financial accounting - ANSWER branch of accounting that provides info to external users
Managerial accounting - ANSWER branch of accounting that provides info to internal users
Expenses - ANSWER outflow
Debit - ANSWER left, expenses
Credit - ANSWER right, revenue
Current liability - ANSWER pay off in less then a year
Current asset - ANSWER expected to be converted to cash, sold, or consumed in 1 yr
Income statement - ANSWER revenues and expenses that total net income ---FOR THE
MONTH OF...
Statement of retained earnings - ANSWER beginning retained earnings - dividends + net
income = ending retained earnings ---FOR THE MONTH OF...
Historical cost principle - ANSWER assets and services should be recorded at their actual cost
Faithful representation - ANSWER information that is complete, neutral, and free from error
Going concern (continuity) assumption - ANSWER business will remain in operation for teh
forseeable future
Entity assumption - ANSWER a business is a separate economic unit
Stable monetary unit assumption - ANSWER assumption that the dollar's purchasing power is
relatively stable ---ignore inflation
Revenue principle - ANSWER revenue is recognized when earned, realizable
Expense recognition principle - ANSWER revenue - expense = net income/net loss
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