Chap. 1-Concept - Chapter 1 Concept Chapter 1 Introduce to...

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Chapter 1 Concept Chapter 1 Introduce to Accounting (Concept) 1. Business: an organization in which basic resources (input) are assembled and processed to provide goods or services (output) to customers. 2. The objective of most businesses is to earn profit, which can be recorded as a formula Profit= Received from customers for goods and services – Paid for providing goods or services 3. Types of Businesses a). Service Businesses- provide services rather than products to customers. b). Merchandising Businesses- sell products they purchase from other businesses to customers. c). Manufacturing Businesses- change basic inputs into products that are sold to customers. 4. Accounting: an information system that provides reports to users about the economic activities and condition of a business. 5.Types of Accounting a). Management Accounting (Managerial Accounting)- the area of accounting that provides Internal users with information. Managerial Accountants employed by a business Are employed in Private Accounting. b). Financial Accounting- the area of accounting that provides external users with information. --Different between Managerial and Financial Accounting: (1). Managerial Accounting takes care of the accounts and transactions that will happen in the future. (2). Financial Accounting takes care of the transactions that occurred in the past. 6. General Purpose Financial Statements: One type of financial accounting report that is distributed to external users. 7. GAAP (Generally Accepted Accounting Principles) a). Business Entity Concept The activities of a business are recorded separately from the activities of its owners, creditors, or other businesses. --Form of Business Entity
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(1). Proprietorship- owned by one individual; easy and cheap to organize; limited resources; Small businesses. (2). Partnership- Owned by one and more individuals; combined skills and resources. (3). Corporation- Large businesses organized under state or federal statuses as a separate
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This note was uploaded on 06/30/2011 for the course ACCOUNTING 2301 taught by Professor Sarah during the Fall '10 term at HCCS.

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Chap. 1-Concept - Chapter 1 Concept Chapter 1 Introduce to...

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