ACCT 2000 Chapter : Chapter 1 Notes
Document Summary
Advantages: simple to establish, broader skills and resources, tax advantages. Advantages: easy to transfer ownership, easy to raise capital, no personal liability. Effective financial reporting depends on sound ethical behavior. Two primary sources of outside funds are: borrow money. Amounts owed are called liability: issue shares of stock. Purchase of resources a company needs in order to operate: Resources owned by a business are called assets. Revenue- amounts earned from the sale of products. Accounts receivable- right to receive money from a customer in the future as the result of a sale. Expenses- cost of assets consumed or services used. Reports revenue and expenses for a period of time. Covers a period of time (time span) month, qtr, year. R/e is the net income retained in the business. Beginning r/e + net income dividends = ending r/e. Reports assets and claims to assets at a specific point in time. Point in time, last day of time span.
