ACCT 200 FINAL STUDY GUIDE

ACCT 200 FINAL STUDY GUIDE - ACCT 200 FINAL EXAM STUDY...

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ACCT 200 FINAL EXAM STUDY GUIDE
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Types of Business Entities 1.) Sole Propreietorship – business by one person a.) ADVANTAGES -you’re your own boss -set your own hours -keep money earned b.) DISADVANTAGES - no time off - could come and take your stuff - need your own money to get started **Acquisition of capital** 2.) Partnership – more than one person owns the business a.) ADVANTAGES - split cost - share work load - share liability b.) DISADVANTAGES - conflicts with other owner - profit decreases - need to trust partner * buy/sell agreement—make at beginning to help workout any upcoming conflicts. 3.) Corporation – a separate legal entity a.) advantages of a corp. - shareholders have the right to transfer shares of stock to other people - stock holders are not personally liable for debts of the corporation - vote to choose who oversees company as a stockholder b.) disadvantages of a corp. - no say in company other than the election of Board of Directors - obliged to pay taxes which are not incurred by the other forms of ownership (DOUBLE TAXATION** = taxes are charged to the corporation, then if the corporation issues a dividend the investors who receive the dividend may also have to pay taxes) **SIDE NOTE: annual shareholder meeting is required by each corporation. Shareholders own the company, but ARE NOT the president, CEO, etc. The Pres, CEO, etc are paid a salary. If the shareholders don’t like what the company is doing they can sell their stock, then they are no longer an owner. *** The value of a company is created by the ideas they come up with! c.) Why do corporations need cash? - to buy equipment, pay employees (even if it is just themselves), iventory, etc
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- If a company accepts credit cards they must have the cash for the products TODAY even if the customer wont be paying until TOMMORROW d.) How do they get cash? - you can borrow money - sell stock - sell services/goods - how much revenue a company has tells you how big the company is Financial Accounting 1.) Provides economic information in order to enhance decision making. a.) Who makes the decisions? - investors - creditors (people who make loans) - others outside the entity Managerial Accounting 1.) Provides economic information to managers and others inside the organization to enhance decision making. Who decides what info must be presented to investors? 1.) Prior to 1929 information requirement had no restrictions or rules. Every company did it their own way. a.) Pyramid Scheme – trick people into buying more shares b.) Every person in America was buying stock before 1929. Then someone realized these companies weren’t worth what they were selling them for and the CRASH happened 2.) in the 1930’s Congress created the Securities and Exchange Commission (SEC) to ENFORCE reporting rules for large publicly held corps. a.) this made people more confident
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This note was uploaded on 04/18/2008 for the course ACCT 200 taught by Professor Shaftel during the Spring '08 term at Kansas.

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ACCT 200 FINAL STUDY GUIDE - ACCT 200 FINAL EXAM STUDY...

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