Internal Users
people who manage part of the business and use financial information
external users
people who do not manage a part of the business but use the financial information
Sole Proprietorship
- a business owned by 1 person
- simple to set up
- unlimited liability
- limited life
- income tax paid by owner
Partnership
- business owned by 2+ people
- limited life
- unlimited liability for each partner
- income tax paid by individual partners
Corporations
- a business organized as a separate legal entity owned by shareholders
- indefinite life
- limited liability for shareholders
- corporation pays income tax
Public corporation
shares are publicly traded
Private corporation
shares are not available to general public
Financing Activities
obtaining funds to finance operations, forms of debt
Investing Activities
purchase or sale of long-lived assets needed to operate the company like property and equipment
Operating activities
main day to day activities of the business like revenues and expenses
common shares
amount paid by investors for shares of ownership in a company
shareholders
Investors who purchase shares orstock in a corporation.
dividends
Payments that distribute a portion of income to shareholders and are normally in the form of cash
Liabilities
debts and other obligations
assets
resources that a company owns or controls
Long-Lived Assets
Are tangible and intangible resources owned by a business and used in its operations over several years
like computers, equipment, goodwill and intangible assets
goodwill
when a company acquires another company, paying a price that is higher than the value of the
purchased company's net identifiable assets
intangible assets
assets that do not have any physical substance themselves but represent a privilege or a right granted
to, or held by, a company like copyrights and patents
income
also known as revenue, increase in economic benefits that result from the normal operating activities of
a business, such as the sale of a product or provision of a service
Accounts Receivable
Amounts to be received in the future due to the sale of goods or services
Accounts Payable
Amounts to be paid in the future for goods or services already acquired