MGAB01H3 Chapter Notes - Chapter 1: Financial Statement, Share Capital, Retained Earnings

• School: UTSC
• Department: Financial Accounting
• Course: MGAB01H3
• Professor: G.Quan Fun

Document Summary

Accounting: the process of identifying, recording and communicating the economic events of a business. Internal users: members of businesses that plan, organized and run the company: these members work for the company (ex: financial directors, marketing mangers, these members need access to detailed accounting information on timely basis c) In reports included: projections of earnings from new sales campaigns, forecasts of cash needs for the next year, analyses of sales costs, budgeted financial statements. External users: member who are outside the business: ex: investors & creditors are the main external users of accounting information. Proprietorships: advantage: simple to set up, all control over business, small capital need to start, disadvantage: owner has unlimited liability, no distinction between owner & business, ex: hair salons, retail stores, farms, plumbers. Partnerships: advantage: more economic resources available, combination of unique skills, disadvantage: unlimited liability for all debts of the partnership, ex: law firms, doctors, engineers, accountants.