Accounting Study

Accounting

measures (business activities), processes (info), communicates (results)

Managerial Acc.

Internal

Financial Acc.

External

Types of Businesses

Sole Proprietor, Partnership, S. Corp., Corperations

Sole Proprietor

• 1 owner

• Private

• Finite life

• Limited resources

• Easier to start

• Personally liable

Partnership

• 2+ owners

• Private

• Finite

• Limited resources

• Easier to start

• Personally liable

Corporation

• Owned by stockholders

• Public

• Eternal life

• Limited liability

• More difficult to start

• More resources

LLC

Limited Liability Corporation

FASB

Financial Accounting Standards Board

GAAP

Generally Accepted Accounting Principals

Faithful Representation

1. Complete

2. Neutral

3. Free of material error

Entity Concept

• Don´t mix business + personal $$

Cost Principal

• Record/report at OG $$

Monetary Unit

• Report in 1 currency

• Ignore inflation

Going Concern

• Continue to operate in future

Accounting Equation

Assets = Liabilities + Equity

AP (Accounts Payable)

Short-term $$ businesses owe to vendors for goods received but not yet payed for

AR (Accounts Receivable)

$$ a customer owes a business for goods received but not yet payed for

Revenue

total $$ earned by selling goods

Expense

cost of doing business

Invest

asset purchased that grows in value over time