Business Organizations
A business with a single owner.
What is a Sole Proprietorship?
Providing information that is complete, neutral, and free from error.
What is faithful representation?
The private organization that oversees the creation and governance of accounting standards in the United States.
What is the Financial Accounting Standards Board (FASB)?
Assets - Liabilities + Equity
What is the Accounting Equation?
Reports on the assets, liabilities, and stockholders' equity of the business as of a specific date.
What is the Balance Sheet?
A business organized under state law that is a separate legal entity.
What is a Corporation?
U.S. governmental agency that oversees the U.S. financial markets.
What is the Securities Exchange Commission (SEC)?
Accounting guidelines, currently formulated by the Financial Accounting Standards Boar (FASB); the main U.S. accounting rule book.
What are Generally Accepted Accounting Principles (GAAP)?
The owners' claims to the assets of the business.
What is Equity?
Reports the net income or net loss of the business for a specific period.
What is the Income Statement?
A business with two or more owners and not organized as a corporation.
What is a Partnership?
An organization that stands apart as a separate economic unit.
What is the Economic Entity Assumption?
A person who owns stock in a corporation.
Economic resources that are expected to benefit the business in the future. Something the business own or has control of.
What are Assets?
Reports how the company's retained earnings balance changed from the beginning to the end of the period.
What is the Statement of Retained Earnings?
A company in which each member is only liable for his or her own actions.
What is a Limited-Liability Company (LLC)?
A principle that states that acquired assets and services should be recorded at their actual cost.
What is the Cost Principle?
The assumption that requires the items on the financial statements to be measured in terms of a monetary unit.
What is the Monetary Unit Assumption?
Debts that are owed to creditors.
What are Liabilities?
Reports on a business's cash receipts and cash payments for a specific period.
What is the Statement of Cash Flows?
The life of the organization terminates at owner's choice or death.
What is a Sole Proprietorship?
Assumes that the entity will remain in operation for the foreseeable future.
What is the Going Concern Assumption?
Requires management to review internal control and take responsibility for the accuracy and completeness of their financial reports.
What is Sarabanes-Oxley (SOX)?
Owner's contributions to a corporation.
What is Contributed Capital?
This equation measures how profitably a company uses its assets. Net Income/Average Total Assets.
What is Return on Assets (ROA)?