H Accounting- Chapters 1 & 2

Operates to earn money for its owners

for-profit

Provides accounting services to clients

public accounting

A person that transfers ideas into products or services

entrepreneur

Summarizes information about the financial status of a business

financial reports

The amount of time covered by an accounting report

accounting period

Assumption that businesses will operate forever

going concern

Money invested by owner(s) or the money provided by banks or investors

capital

A legal document giving a business the right to operate as a corporation

charter

People are free to produce the goods and services they choose

free enterprise

Buys finished goods and sells them to individuals or other businesses

merchandising

True or False- Only businesses that earn profit will have the economic resources to continue to operate

false

True or False- All types of businesses sell a product

false

True or False- One advantage of owning your own business is that any financial gain from operating the business is yours

true

True or False- The corporation is the easiest form of business to organize

true

True or False- A partnership can be owned by more than 2 individuals

true

True or False- Service businesses are not intended to operate for a profit

false

True or False- GAAP are the rules for accounting

true

True or False- For accounting purposes, a business entity is separate from its owners

true

True or False- There is not a national test to become a CPA

false

True or False- Target is an example of a merchandising business

true

What does CPA stand for

Certified Professional Accountant

What do you have to do to become a CPA

4-year degree and pass the national test

Example of a service business

Pink Lemonade

Example of a merchandising business

Target

2 Advantages of a sole proprietorship

all profit to yourself and it is easy to start up

2 Disadvantages of a sole proprietorship

hard to raise money for and responsible for anything that goes wrong (unlimited liability)