FIN 305 Lecture Notes - Lecture 2: W. M. Keck Observatory
14 Jan 2017
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Document Summary
Terms: (1) business entity, 3 fundamental goals, owner, 3 business activities, (2) transactions, cash inflows and outflows, continuity formula (3) fundamental goal #3, motivation to invest, expectation for reward, need for financing, Calculation of gains, return on investment (4) capital, capital provider, returns, appreciation, capital gain, income (interest, rent), Entity - it is an organization of people and other resources assembled to achieve a purpose by conducting various activities to produce and sell goods and services to a market. Business entity - is a standalone economic organizational unit. It requires resources and financing for those resources and undertakes activities with the intention or expectation of economic gain or profit. It has a life independent of its owners and managers; expected to continue indefinitely. 3 fundamental goals: business sets up 3 goals it wants to achieve. Mission/its reason for being: to create value by satisfying a need in a market.
