Chapter 1 outline - Chapter 1 Business- consists of all...

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Chapter 1 Business- consists of all activities necessary to provide the members of an economic system w/ good and services Business entities- organized to earn a profit o Sole proprietorship- single owner Economic entity concept- requires that a single, identifiable unit of org be accounted for in all situations; separate personal from business affairs Not a taxable entity o Partnership- a business owned by 2 or more individuals Not a taxable entity o Corporations- an entity organized under the laws of a particular state Share of stock- certificate that acts as evidence of ownership in a corporation Advantages of corporation: Ability to raise large amounts of money in a relatively brief period of time o Sell stocks and bonds to raise money Ease of transfer of ownership o Simple to call a broker and sell a stock Nonbusiness entities- organized for a purpose other than to earn profit o Ex: hospital, school district o Lack of identifiable owner Organizations and social responsibility o Many corporations have established programs to help others such as charities Financing activities o Money is needed to start a business o Accounting is referred to as the language of business o Liability- an obligation of a business Note payable- when a company borrows money at a bank Bonds payable- when a company sells bonds Taxes payable- amounts owed to the govt for taxes o Capital stock- term used by accountants to indicate the dollar amount of stock sold to the public No due date for when stockholder will be paid like a bond is o Creditor- someone who buys bonds in a company of makes a loan
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This note was uploaded on 09/23/2008 for the course ACCT 151 taught by Professor Largay during the Fall '07 term at Lehigh University .

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Chapter 1 outline - Chapter 1 Business- consists of all...

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