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[MGMT 30A] - Final Exam Guide - Ultimate 25 pages long Study Guide!


Department
Management
Course Code
MGMT 30A
Professor
Patricia Wellmeyer
Study Guide
Final

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UC-Irvine
MGMT 30A
FINAL EXAM
STUDY GUIDE

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Chapter 1
Forms of Business Organization
Sole Proprietorship: owned by one person
o Simple to establish
o Owner controlled
o Tax advantages
Partnership: owned by two or more persons, not enough economic resources, partners
bring unique skills or resources
o Simple to establish
o Shared control
o Tax advantages
Corporation: separate legal entity owned by stockholders, pay higher taxes
o Easier to transfer ownership
o Easier to raise funds
o No personal liability
Hybrid forms of Business Organization
Limited Liability Companies (LLCs)
Subchapter S corporations
Accounting: information system that identifies, records, and communicated the economic
events of an organization to interested users
Internal users: managers who plan, organize, and run a business, marketing managers,
production supervisors, finance directors, and company officers
External users: investors, creditors, taxing authorities, customers, labor unions, regulatory
agencies
Sarbanes-Oxley Act (SOX): reduce unethical corporate behavior, decrease likelihood of future
corporate scandals, top management must certify accuracy of financial information, increased
independence of outside auditors that review accuracy of corporate financial statements and
oversight role of board of directors
Accounting information system
Creditors: persons or entities that the business owes money to
Liabilities: amounts owed to creditors in form of debt or other obligations
Note payable:
Bonds payable:
Common stock: total amount paid by stockholders for the shares they purchase, sells new
shares of stock
Generally Accepted Accounting Principles (GAAP): rules of accounting
Ceditos’ lais ust e paid efoe stokholdes’ lais
Dividends: payments of cash from a corporation to its stockholders
Assets: resources owned by a business
Fixed assets: property, plant, and equipment
Revenue: increase in assets or decrease in liabilities resulting from the sale of goods or
performance of services in the normal course of business, sales revenue, service revenue, and
interest revenue
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Supplies: assets used in day-to-day operations
Inventory: assets/goods available for future sales to customers
Account receivable: right to receive money in the future
Expenses: necessary to produce and sell the product, cost of assets consumed or services used
in the process of generating revenues
Cost of goods sold (materials)
“ellig epeses ost of salespesos’ salaies
Marketing expenses (cost of advertising)
Administrative expenses (salaries of administrative staff, telephone and heating costs of
corporate office)
Interest expense (amount of interest paid on various debts)
Income tax (corporate taxes paid to the government)
Accounts payable (obligations to pay for goods purchases on credit from suppliers
Interest payable (outstanding amounts owed to the bank)
Wages payable (owed to employees)
Sales tax payable/ property taxes payable/ income taxes payable (owed to government)
Net income: amount that revenues exceed expenses
Net loss: amount that expenses exceed revenues
Financial statements
Income statement: revenues and expenses during specific period of time and resulting
in net income or loss
Retained earnings statement: how much previous income was distributed to you and
the other owners of your business in the form of dividends and how much was retained
in the business to allow for future growth for a specific time period, same as income
statement
Balance sheet: assets and liabilities at a point in time
Statement of cash flows: where your business obtained cash during a period of time and
how that cash was used, cash receipts and payments of a business (operating, investing,
and financing)
Amounts received from issuing stock are not revenues and amounts paid out as
dividends are not expenses
Retained earnings: net income retained in the corporation
Stockholdes’ euit: oes’ lai to assets, oo stok ad etaied eaigs
Basi aoutig euatio: assets = liailities + stokholdes’ euit
Annual report: report prepared by corporate management that presents financial information
including financial statements, a management discussion and analysis section notes, and an
idepedet audito’s epot
Management discussion and analysis (MD&A): sections of the annual report that presents
aageet’s ies o the opa’s ailit to pa ea-term obligations, its ability to fund
operations and expansion, and its results of operations
Notes to the Financial statements: notes clarify information presents in the financial statements
and provide additional detail
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