Final ReviewChapter 1Types of business organizations (characteristics, pros, cons)Sole proprietorship- owned by one person, most control/liability, most tax advantageous, more challenging for transfer of ownership, easiest, least resources.Partnership- 2+ owners, easier, control shared, more tax advantageous, easier transfer of ownershipCorporation- many owners, difficult, most resources, most shared control, least liability, least tax advantageous, easiest transfer of ownership (shares).Users of financial informationInternal Users- people who work for the business, managers who plan organize, and run the business.External Users- work outside business, include investors, creditors, taxing authorities, regulatory agencies, customers, labor unions, and economic planners.Types of business activitiesFinancing- raise funds for operations (2 primary sources of outside funds: borrow money/sell stock)Investing- what a corporation does with the financing it receives. (Purchase assets, excess cash=invest in debt/equity securities)Operating- operations of the business, earns revenue when operating, earns revenues, incurs expenses Financial Statements (what is on them and in the order produced)Income Statement- RevenueExpensesNet loss/income (Rev-Exp) Retained Earnings- Beg. Retained earnings+ Net loss/income- DividendsEnding Retained earningsBalance Sheet- Assets (= liabilities + SHE) -Total AssetsLiabilities -Total LiabilitiesStockholder’s Equity -Total SHE (common stock and retained earnings)Total Liabilities & SHEStatement of Cash FlowsCash Flows from op actNet cash provided by op actCash flows from invest actNet cash provided by invest actCash flows from financing actNet cash provided by financing actNet Increase in cashCash at beginning of periodCash at end of periodChapter 2Classified balance sheet (what is classified as current vs long term)Current- expected to be converted into cash or used in the business within a short period of time, cash, investments, receivables, inventories, PPE.Long term-