Management and Organizational Studies 1023A/B Study Guide - Midterm Guide: International Accounting Standards Board, Cash Flow Statement, Retained Earnings

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Maria Ferraro

Document Summary

Accounting: information system that identifies and records the economic events of an organization. External users: investors and creditors are main external users of accounting information. Simple to set up and gives you control over business. Only need small amount of money to start business. Own receives any profits, suffers any losses and personally liable for all debts of business. No legal distinction between business as economic unit and the owner: partnerships. Similar to proprietorship but more than one owner. Any owner may be forced to use personal assets to pay debt of another. Sometimes, limited liability formed for selected partners: corporations. Shareholders enjoy limited liability; losing only amount they invested into company. Investor of corporation receive shares to indicate ownership claim. Private corporations: don"t issue publicly trades shares. Borrowing money and selling shares in exchange for cash -> main ways to raise funds. Shareholders have no claim to corporate resources until claims of creditors are satisfied.