Accounting Chapter One

Sole Proprietorship

A business organization owned by one person.

Partnership

A business organization owned by two or more individuals.

Corporation

A legal entity that is separate from its owners, allowing for limited liability.

Cooperative

A business organization owned and operated for the benefit of its members.

Accounting

The process of recording, summarizing, and reporting financial transactions.

Internal Users

Individuals within an organization who use accounting information for decision-making, such as management.

Diagnostic Analytics

A type of data analysis that focuses on understanding the reasons behind past events.

Financing Activities

Actions taken by a business to raise funds from external sources.

Liability

An obligation or amount owed to creditors by a business.

Income Statement

A financial statement that reports a company's revenues and expenses over a specific period.

Basic Accounting Equation

The formula stating that Assets = Liabilities + Stockholders' Equity.

Statement of Cash Flows

A financial statement that provides information about a company's cash inflows and outflows.

Operating Activities

Business activities that involve selling products or providing services.

Retained Earnings Statement

A financial statement that reports the retained earnings for a specific period.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and stockholders' equity at a specific point in time.

Auditor

A professional who conducts an independent examination of financial data to ensure accuracy and compliance.

Common Stock

The total amount paid by stockholders for shares of ownership in a company.

Investing Activities

Business activities that involve purchasing long-term assets or investments.

Net Income

The profit of a company calculated as Revenues – Expenses.

Unqualified Opinion

An auditor's statement indicating that financial statements present a true and fair view of the company's financial position.