BUSI 1003 Chapter Notes - Chapter 8: Issued Shares, Authorised Capital, Stock Split
1 May 2014
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Financing operations: businesses might finance their operations through 1 of 2 ways: debt financing - includes all liabilities owed by a business, equity financing - investments from owners of the business. Stock is issued to represent ownership interest in a corporation. Liabilities: debts or obligations arising from past transactions that will be paid with assets or services. Current liabilities - obligations due within one year or within the company"s normal operating cycle, whichever is longer. Accounts payable - also called trade accounts payable. Obligations to pay for goods and services used in the basic operating activities of the business. Inexpensive way to finance activities of a business. Generally, there is no interest until 30 days after the invoice. Promissory notes are used to settle an account payable or when a business lends money to an individual or another business. Interest is accrued using the formula for simple interest . To the lender, interest is a revenue.
