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Canada (161,966)
Accounting (248)
ACCT 2220 (54)
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Chapter 1

ACCT NOTES - Chapter #1

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ACCT 2220

ACCT NOTES – CHAPTER #1 Accounting - The information system that identifies and records the economic events of an organization, and then communicates them to a wide variety of interested users. Users and Uses of Accounting Users of accounting information can be divided broadly into two types: internal users and external users Internal Users: - Managers plan, organize and run companies. - They work for the company. - Financial Accounting. - Management Accounting - Include: Finance directors, marketing managers, human resource personnel, production supervisors, and company officers. External users: - Primary Users are: 1- Investors 2- Creditors 3- Others: tax authorities, regulatory agencies, customers, labour unions, economic planners. Forms of Business Organizations There are three forms of business organization: proprietorship, partnership and corporation. Proprietorship: - A business owned by one person - Simple to set up and gives control over the business - The owner receives any profits, suffers any losses, and is personally liable for all debts of the business. - There is no distinction between the owner and the business. - Examples: salons, farms, small retail stores, plumbers, mechanics. Partnerships: - Similar to proprietorship except with more than one owner. - Typically used to organize retail and service business, including lawyers, doctors, architects, engineers and accountants. Corporations: - As an investor in a corporation, you receive shares to indicate your ownership claim. - Investing makes it easier for corporations to raise funds - Shareholders have limited liability since they only risk losing the amount that they have invested in the company’s shares. - May be public or private corporations. - Public: commonly distribute their financial statements to shareholders, creditors, other interested parties, and the general public upon request. - Private: do not issue publicly traded shares Business Activities All businesses are involved in 3 types of activity: Financing, investing, and operating. Financing Activities - Obtaining and repaying funds to finance the operations of the business - Examples: borrowing
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