ACCT 2001 Chapter : Ch 1 Notes
Document Summary
A separate legal entity, not an extension of the owner. Someone sued mcdonalds and the individual shareholders did not have to pay, mcdonalds as a corporation had to pay. Shareholders typically don"t have a say in how things are run. Accounting identifies, records and communicates economic events to the interested users. People that are not working or affiliated with the company per say. Investors, creditors, suppliers, taxing authorities, regulatory agencies, customers, labor unions, etc. People who are directly affected by the company. If you get sued or if you mess up something the cost is all on you. If one person cuts a gas line the cost falls on both of the partners. Reason passed: reduce unethical corporate behavior and decrease the likelihood of future corporate scandals. Top management must certify the accuracy of financial information. Penalties for fraudulent financial reporting are much more severe. Increased independence of outside auditors and the oversight role of the board of directors.
