MOS II 1023 A - Chapter 1

MOS II 1023 A - Chapter 1 - MOS II 1023 A Chapter 1...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
MOS II 1023 A - Chapter 1 Accounting — The information system that identifies and records the economic events of an organization, and then communicates them to a wide variety of interested users Internal and External Users: Internal Users of Accounting Information (Finance directors, marketing managers, human resource personnel, production supervisors, and company officers) — Plan, organize, and run companies (Work of the company) External User of Accounting Information (Investors) — Make decisions to buy, hold, or sell their ownership interest (Do not work for the company) External User of Accounting Information (Lenders) ex. Bankers — Evaluate the risks of lending money. (Do not work for the company) External User of Accounting Information (Creditors) ex. Supplier — Decide whether or not to grant credit (sell on account) to a customer (Do not work for the company) Primary users of accounting information: Investors, lenders, and other creditors Shareholders — Another name for investors Lenders — Another name for creditors Forms of Business Organization: Three common forms of business organization — proprietorships, partnerships, and corporations Proprietorships: A business owned by one person...often “sole" simple to set up and gives the owner control over the business only a relatively small amount of money (capital) is needed to start in business as a proprietorship Unlimited liability: owner (the proprietor) receives any profits, suffers any losses, and is personally liable (responsible) for all debts of the business no legal distinction between the business as an economic unit and the owner life of the proprietorship is limited to the life of the owner business profits are reported as self-employment income and taxed on the owner’s personal income tax return the business records of the proprietorship must be kept separate from those related to the owner’s personal activities Reporting Entity Concept (applies to all businesses): requires that the economic activity that can be identified with a particular company be kept separate and distinct from the activities of the owner and of all other economic entities
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Partnerships: a business owned by more than one person often formed because one person does not have enough economic resources to start or expand the business, or because partners bring unique skills or other resources to the partnership Each partner generally has unlimited liability for all debts of the partnership, even if one of the other partners created the debt partnerships can be formed with limited liability for selected partners profits of the partnership are reported as self-employment income and taxed on each partner’s personal income tax return Corporations: a business organized as a separate legal entity owned by shareholders corporations pay income tax as separate legal entities on any corporate profits Public corporations: distribute their financial statements to investors, lenders, other
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern