acct 211 - Ch2 notes

acct 211 - Ch2 notes - Ch. 2 Notes (Page 1) Business...

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Ch. 2 Notes (Page 1) Business Activities : 1. service business = architect, lawn service, etc 2. merchandising business = retailer 3. manufacturing business = make something out of raw materials OWNERSHIP STRUCTURES: Sole Proprietorship : one owner owner assumes all the risks owner makes all the decisions Partnership : 2+ partners partners share risks may disagree on how to run the business very fragile Corporation : stockholders stockholders have limited risk stockholders may little influence on business decisions INTRO TO FINANCIAL STATEMENTS : companies prepare interim financial statements as well as annual ones 3 PRIMARY FINANCIAL STATEMENTS : 1. Income Statement profit (revenues over a period of time) activity statement = over time “a taxi meter” 2. Balance Sheet where a business stands at a point in time “photograph” financial position “position statement” 3. Statement of Cash Flows cash in and cash out over a period of time
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Ch. 2 Notes (Page 2) liquidity = ability to pay “activity statement” revenues = cash inflows expenses = cash outflows
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acct 211 - Ch2 notes - Ch. 2 Notes (Page 1) Business...

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