02 13 2014 Exam 1 Outline Sole Proprietorship Partnership One person owns their own company Simple set up allows for control tax advantage Disadvantage Personal liability Two or more people get together to own a business Simple set up Broader skills and resources Tax advantages Disadvantage Personal liability Corporation Easy to sell interest Easy to raise capital No personal liability Disadvantage taxes Accounting is the information system that identifies records and communicates the economic events of an organization to interested users Revenues Amounts earned from the sale of products Sales revenue service revenue and interest revenue Inventory goods available for sale to customers Accounts receivable right to receive money from a customer in the future as a result of a sale Expense cost of assets consumed or services used Cost of goods sold selling marketing administrative interest and income taxes expense Liabilities arising from expenses include accounts payable interest payable wages payable sales taxes payable and income taxes payable Net Income when revenues exceed expenses Net Loss when expenses exceed revenues Income Statement Revenues Expenses Retained earnings statement Beginning R E net income dividends Ending R E Balance Sheet Assets Liabilities stockholders equity 02 13 2014 Assets Current Assets Long term investments Property Plant Equipment Intangible Assets Liabilities Current Liabilities Long term Liabilities Stockholders equity Stockholders equity 02 13 2014
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