[ACCTMIS 2200] - Midterm Exam Guide - Comprehensive Notes for the exam (18 pages long!)

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ACCTMIS 2200
MIDTERM EXAM
STUDY GUIDE
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Company owned by one person
1)
Easy to form/established
2)
Owner-controlled
3)
Barber shops, auto repair shops etc
4)
Sole Proprietorship
A)
Business owned by two or more persons
1)
Often happens when one person lacks economic resources
2)
a)
Pull resources from different people to create partnerships
3)
Professional practices like lawyers, doctors, CPAs etc.
4)
Partnership
B)
Owned by many people (stockholders) who own stock in company
1)
Separation of info for corporation and stockholders
a)
Separate legal entity from owners
2)
Easier to raise funds & transfer ownership
3)
No personal liability
4)
Corporation
C)
Type of Businesses
I)
Loans from bank, parents
a)
Raising money by borrowing
1)
Have to be repaid with interest
2)
Needs to be repaid
3)
Interest can be used as tax deductible
4)
Debt Financing
A)
Getting folks to invest in your company
1)
Owner investment and then selling shares of ownership through stock
2)
No repayment legally required, but dividend is paid to investors
3)
Dividends, unlike interest, are NOT tax deductible
4)
Equity Financing
B)
How to raise funds?
II)
Links decision makers to economic activities and results
1)
ACCOUNTING!!
A)
How capture results of your business?
III)
Introduction 1
Monday, December 26, 2016
10:18 AM
Exam 1 Material Page 1
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In order to see what's going on in the company, accountants give a summary of the
economic activities, which is shown to the decision makers. These decision makers
stockholders/aagersake decisios that creates ore ecooic activit. It’s a
never-ending cycle
2)
Info used by insiders (people in the company)
(1)
Enough cash to pay bills? Can we afford to give pay raises?
(2)
Managerial Accounting
a)
Info used by outsiders (people outside of company, investors, creditors etc.)
(1)
Is company earning good income? How does this company compare to
similar ones?
(2)
Get info to outsiders through Financial Statements (accounting reports)
(3)
Financial Accounting
b)
Types of Accounting info
3)
GAAP for short
1)
Standard accounting rules to allow for easy comparison of financial statements
between two companies
2)
Private Sector that develops most of accounting rules
i)
Does ot have epress authorit to develop GAAP so…
ii)
Financial Accounting Standards Board (FASB)
a)
Government gave authority to SEC (Government run)
i)
SEC does so much, they allow FASB to form GAAP
ii)
Securities Exchange Commission (SEC)
b)
Coes fro…
3)
Generally Accepted Accounting Principles
A.
Accounting Rules
IV)
Exam 1 Material Page 2
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