Types of Businesses
This type of business is owned, outright, by one individual.
Sole Proprietorship
Who creates Accounting rules?
GAAP
What is an Asset?
Resources a business owns/ controls.
Is each business event a transaction?
No
What is the basic account that shows us where the $ is?
Cash
An advantage of this type of business is that it is easy to form and dissolve. (Think 2)
Partnership
FASB - Financial Accounting Standards Board.
What is "stockholder's" Equity?
Claims of the owner.
What are the first 3 steps of the accounting cycle?
1. Analyze business transactions.
2. Journalize those transactions.
3. Post to journal.
Where we see the value that are shareholders have?
Common Stock
This type of business has a continuous life. Meaning it is easy to transfer ownership.
Corporation.
What are the two types of measurements for transactions?
1. Historical Cost
2. Fair Value
What type of capital is common stock?
Contributed - often from shareholders.
What is the difference between external and internal transactions?
Answers may vary.
Where do we see what equipment, buildings, machines we have?
PA - Plant Assets
Double taxation hampers this type of business.
Corporation.
What is one basic assumption that all transactions have in common?
All transactions are based on a monetary unit, except if it was stated otherwise.
If we need to find the value for all liabilities on hand, how could we find the number?
Take (Assets - Stockholder's Equity).
External
What type of account is something that we purchase on credit?
Payable Account
What are the four types of non-business entities?
1. Government
2. Charities
3. Education
4. Other non-for-profit organizations.
What requires that all economic entities are separate and distinct from it's owners?
Economic Entity assumption.
What effect do Revenues, Expenses, and Dividends have on Retained Earnings?
Revenue; Increase
Expenses; Decrease
Dividends; Decrease
If John buys $250 shares of common stock, what would be the corresponding transaction?
Cash: Increase (Debit)
Common Stock: Increase (Credit)
What is the difference between a payable and receivable type of accounts?
Answers may vary.