ACTG 1P91 Lecture Notes - Lecture 1: Sole Proprietorship, Information Asymmetry, Financial Statement

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Municipal government ex; city of st catherines. Hospitals, universities, and so on: sole proprietorship (for profit) 2 or more owners: corporation (for profit) Unlimited liability: very dangerous for owners because their assets can be taken away. You only pay tax once since it is a separate entity only owner pays not the company as a whole. Limited liability (all you can lose is limited to your investment) Assets are more protected b/c of limited liability. Corporation is also called an artificial person. To form a corporation: you need articles of incorporation which is equivalent to a birth certificate should be filed w/provincial government. Financial reporting: process of preparing financial reports. Auditor: person/individual that prepares the financial statements. Information asymmetry: calls for auditor and regulator. It is a situation where one party has more or better information than the other. Gaap (generally accepted accounting principles) rules for private companies. Ifrs (international financial reporting standards) rules for public companies.

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