Financial Statements
Accounting Equation
Assets = Liabilities + Owner's Equity (ALOE)
Something of value owned
Asset
A business activity that deals with primary operations
Operating Activities
Three types of business structures?
Sole proprietorship, partnership, corporation
The type of accounting that focuses on measuring the business activities of a company
Financial Accounting
Net Income Equation
Revenues - Expenses
Creditor's claims to resources
Liability
The cost of providing goods and services
A corporation that does not have to share their financial information with the public
Private Corporation
The type of that accounting focuses on the decision making aspect of accounting
Managerial Accounting
Five groups of accounts
Assets, Liabilities, Stockholder's Equity, Revenues, and Expenses
Owner's claims to resources
Owner's Equity
A business activity that deals with the purchase and sale of resources expected to benefit a company for several years
A corporate loss cannot exceed the amount invested
Limited Liability
Type of accounting that is important for external parties
Financial Accounting
Two groups of accounts presented on the income statement
revenues and expenses
The amounts recognized when the company sells products or services
revenues
A business activity that deals with investors and creditors
Financing Activities
An advantage of a corporation
limited liability; selling stock to raise capital
Money owed to another business
Account Payable
Three groups of accounts presented on the balance sheet
assets, liabilities, stockholder's equity
Distributions to stockholders
Dividends
Paying utilities is a(n) ______ activity
Operating
A corporation whose stock is traded on the stock exchange
Publicly traded company
Money that is owed to you from a customer
Account Receivable