These are extra notes on different principles and the reasoning behind certain problems in the practice tests and extra notes for the course pack.Ch. 1Owners of the companySole proprietorship – 1 owner who has complete responsibility (legal entity) business income is taxablePartnership – 2 or more owners (both are legal entity), share of income is taxableCorporation – corporation is legal entity, double taxationBasic Financial Statements (in order): 1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash FlowsFairly presented: Financial statements have to be within the guidelines or follow the rules of GAAP (Generally accepted accounting principles) to make sure the information doesn’t mislead usersAdequate disclosure: Use footnotes to help guide readers in understanding complex transactionsBALANCE SHEET: reports the financial position or is a snapshot, it basically tells where the company is or how much resources, debt, equity they have at any point in time.
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