Management and Organizational Studies 1023A/B Lecture Notes - Legal Personality, Limited Partnership, Canada Revenue Agency

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Jan 16 - Introduction: Accounting. Why does Accounting matter?
Language of business
Global economic systems depend on reliable and accurate financial
reporting
Accounting has changed on how business programs and are structured due
to recent crises – more important for all people in business to understand
accounting
Steps:
1. Measures business activities eg. Customers buying products, paying bills
2. Processes data into reports (financial statements)
3. Communicates results to decision makers
Accounting identifies and records the economic events of an organization and
communicates to interested users.
Two broad categories of users of financial information:
1. Internal users
- Managers plan, organize and run a business. Decisions such as prices,
strategic, marketing, employee compensation, budgeting, resource
allocation
2. External Users
Primary users: investors, creditors
- Others: tax authorities eg. Revenue Canada, regulatory agencies eg. Check
to see if there is money to follow regulations they set out, customers, labour
unions eg. to see if workers get the proper salary, economics planners,
communities eg. A large company's closure that employs a large amount of
people will effect the town in a huge way financially
Forms of Business Organizations
Proprietorship – owned by one person
Partnership – owned by more than one person – each person's different
strengths contribute to the overall business. Financial issues tied to parties
if there is a small amount. Limited partnership – liability is limited to what
was invested in the business.
Corporation – separate legal entity having ownership held by shareholders.
- May be public or private: if you are a public corporation, you are trading on
stock exchange – anybody can buy shares in the company
- More costly to set up and organize than proprietorship or partnership due
to lawyer help needed or other help.
- Limits liability the most – wouldn't have to pay anything than what person
originally invested.
Types of Businesses
1. Manufacturing business: completes a product that people want to pay more
than the cost of manufacturing
- GM – cars, trucks, vans.
- Intel – computer cips
- Nike – shoes
2. Merchandising business – sells products, but doesn't make it.
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