Textbook Notes (280,000)
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UC-Davis (1,000)
MGT 11A (30)
Chapter 1

MGT 11A Chapter Notes - Chapter 1: Double Taxation, Accountant, Internal Control

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Ch. 1 cont.
Higher risk implies higher but riskier expected returns.
Advantages of corporate form of business
- The shareholders elect board of directors, who appoint managers to run the business,
so the owners are not personally liable for corporate acts and debts
- A corporation is responsible for its own acts and its own debts
- The owners have limited liability
- A corporation may have multiple owners
- Corporatio’s earigs are sujet to doule taatio
3 types of business activities
- Financing : provides the means that the organization uses to pay for resources to carry
out plans
- 2 sources of financing
- Owner = resources contributed by owner w/ any income the owner
leaves in the organization
- Nonowner (or creditor) = the resources contributed by creditors
- Financial management = task of planning how to obtain these resources, and set
the right mix between owner & creditor financing
- Investing : is the acquiring & disposing of resources (assets) that the organization uses to
acquire & sell products/services.
- Assets are fuded  the usiess’s fiaig
- Operating ___________________________?
4 accounting assumptions
- Going concern (assumption) = accounting info reflects a presumption that the business
will continue operating instead of being closed/sold
- Monetary unit (assumption) = means that transactions and events are expressed in
monetary/money units.
- Time period assumption (important!) = presumes that the life of a company can be
divided into time periods, like months/years, and useful reports be prepared for those
In order of most opportunities
- Private accounting - / it’s eploees orkig for usiesses
- Public accounting - involves services like auditing and tax advice
- Government, not-for-profit and education
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