Definitions
debt company owes to external parties
What is liabilities
Costs of running business
What is expenses
Paying Cash for Supplies increases/decreases these accounts
What is Decrease cash and increase supplies expense
Has a single liable owner
What is a Proprietorship?
Money earned from performing services or delivering goods?
What is Revenue
owner's residual claim on the company's asset
What is Equity?
Revenue= 100,000 Net Income= 70,000 Expenses=?
What is $30,000
Receiving cash from an investment increases/decreases these accounts
What is Increase assets (cash) and increase owner's equity
2 or more owners
Each owner is responsible for the other's illegal business practices
Partnership
Everything company owns
What is Asset?
distributions of net income to shareholders that directly decreases retained earnings
What is dividends
Welles Productions ends the year with $200,000 in net income. They're able to retain $93,900 and invest the money into new cameras. They were able to distribute this much in dividends to their stock owners.
Dividends = $106,100
Company giving cash to pay off an good received on account increases/decreases these accounts
What is Decrease Asset (cash), decrease Liabilities (accounts payable)
Owners pay personal taxes on profit. They can only be sued for whatever the business actually has, individual members' assets cannot be touched.
What is a Limited-Liability Company?
ash received from customer to a business for goods and services the receiving party plans to provide in the future
What is Unearned Revenue?
Money that stockholders decides to reinvest into the business
What is Retained earnings
On Jan 1, 2022, Fielder Airport buys a used plane for $800,000. The seller, Northsouth Airlines, originally purchased the plane for $700,000. On Dec 31, 2023 a professional appraises the plane for $900,000. According to the historical cost principle, Fielder Airport would record the purchase record as....
What is $800,000?
Bought supplies on account increases/decreases these accounts
What is increase Expense (supplies expense), increase Liability (accounts payable)?
Eric starts a new business. He uses his personal car in the business with the expectation that later the business can buy a car. All expenses for operating the car, including gas, oil, tune-ups, and new tires are paid out of business funds. His actions violate this principle.
What is the entity assumption rule?
debts company owes w/ interest
What is Notes Payable
Royco records $16,000 from Waldorf Industries for car maintenance, of that amount $10,000 is in cash and $6,000 goes towards unearned revenue. Royco has $8,000 in accounts receivable, $20,000 in land, and $3,000 in unearned revenue. What are their total assets and total liabilities?
Assets = $38,000
Liabilities = $9,000
Owned by stockholders
Double taxation: Corporation taxed on income tax + stockholders taxed on dividends as well
Stockholders are not held accountable for company's activities
What is a Corporation?