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Chapter 1

ACC 100 Chapter Notes - Chapter 1: Limited Liability, Sole Proprietorship, Mexican Peso


Department
Accounting
Course Code
ACC 100
Professor
Else Grech
Chapter
1

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ACC 100: CHAPTER 1 NOTES
FORMS OF ORGANIZATIONS:
Sole Proprietorship: 1 owner, unlimited liability
Partnership: 2 or more owners, unlimited liability
Corporation: many owners, ownership based on shares, organized under province o
r federal government, limited liability
Unlimited liability meaning that if you cannot pay bank creditors or the bank th
ey can take anything from your in terms of compensation, even personal property
TYPES OF BUSINESS ACTIVITY:
Financing
raising funds
Investing
buying land, building, equipment, etc.
Operating
selling goods/services
INTERNAL AND EXTERNAL USERS OF ACCOUNTING INFORMATION:
Internal: Management - Need to know accounting info in order to know what best s
uits their needs
External: Current and Potential Owners, Rev. Canada, Bank/Creditors, Customers,
Financial Analysts, Suppliers, Competitor, etc.
WHAT IS ACCOUNTING?
Indentifying, Measuring and Communicating Economics Information to Various Users
BALANCE SHEET
Reports the assets, liabilities, and shareholders
equity as at a specific point i
n time
CASH FLOW STATEMENT
Reports the cash receipts and payments for a specific period of time
INCOME STATEMENT
Reports the results of operations for a specific period of time
STATEMENT OF RETAINED EARNINGS
Reports the changes in retained earnings for a specific period of time
THE ACCOUNTING EQUATION
Assets = Liabilities + Owners Equity
ECONOMIC ENTITY CONCEPT
Each entity has its own books, records and financial statements that are separat
e from owners
No intermingling of personal and business assets and liabilities or income and e
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