Financial \u2013 Chapter 1 - Financial Chapter 1 Accounting the process of identifying measuring recording and communicating financial information about a

Financial – Chapter 1 - Financial Chapter 1 Accounting...

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Financial – Chapter 1 - Accounting: the process of identifying, measuring, recording, and communicating financial information about a company’s business activities so decision makers can make informed decisions. It helps people answer questions and make better decisions. Sole Proprietorship - You are liable - One business owner - Very easy to attain - Account for more than 70% of businesses - Popular in small businesses (e.g. restaurants, retail stores, etc.) Partnership - Two or more people involved - Popular in small businesses - Easy to attain and dissolve - Issues: o Division of liability o Ethical liabilities of each partner Corporation - Business organized under the laws of a particular state - Owned by stockholders, where ownership is determined by owned stock (shares) - Able to raise a lot of capital through stock - Stockholder’s liability is how much they invested in the company - Able to transfer shares easily between shareholders - Very complex to form, but high longevity - Taxes (double taxation): o First tax: company is taxed when income is earned o Second tax: individual level as earnings are distributed to stockholders
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