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test 1 notes - Accounting Notes-Exam 1 Chapter 1 Basic...

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Accounting Notes-Exam 1 Chapter 1 Basic Activities of Businesses: 1. Operating Activities: day-to-day things, buying supplies, paying employees 2. Investing Activities: things to grow your business; buying or selling stuff 3. Financing Activities: borrowing, repaying $, getting capital; how you finance your business Entity Types: 1. Sole Proprietorship: owned by one person. Owner personally liable for all debts of the business 2. Partnership: owned by 2 or more people. Each partner is personally liable to all debts of the business 3. Corporation: a separate entity from both legal and accounting perspective. Owners are the stockholders and are not personally responsible for debts 4. Public Company: have their stock bought and sold on the market Balance Sheet: Assets = Liabilities + Stockholders Equity Assets: Resources owned by the company Liabilities: Resources owed to creditors SE: Resources owed so stockholders *Always prepare Net Income Statement 1 st , then Statement of Retained Earnings
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