acc200finalexamstudyguide

acc200finalexamstudyguide - TYPE Sole Proprietorship...

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TYPE ADVANTAGES DISADVANTAGES TAXES Sole Proprietorship -easy to start -complete control -unlimited liability -limited funds/skills -profits taxed on owner’s tax return Partnership -additional funds -taxed once -control is shared -unlimited liability for general partner -profits are shared -required to file tax return, don’t pay taxes however, each partner on their tax return C-Corporation ( Public or Privately held) -limited liability for stockholders -unlimited # of stockholders -expensive -SEC regulations if publicly held -double taxation -business files own tax return, pays taxes -remaining profits (dividends) taxed again on stockholder level S-Corporation -limited liability for stockholders -stockholders taxed as if it were partnership (no double taxation) -control/profit shared -strict eligibility requirements -business required to file taxes, not pay -shareholders pay taxes on dividends Limited-Liability Company OR Limited-Liability Partnership -owners have limited liability -more flexible than S-Corp -control/profit shared -owners have limited liability against another partner, can be held liable for claims against company -members can choose Financing activities: how a company obtains funds it needs Investing activities: what a company does with funds (not day-to-day) Operating activities: day-to-day transactions a company engages in Order of financial statements: 1. Income Statement: company’s ability to make a profit for a period of time Revenues and expenses 2. Statement of Retained Earnings: accumulation of profit over a period of time Net income and dividends 3. Balance Sheet: snapshot of assets, liability, stockholder’s equity at a point in time Assets, liabilities, owner’s equity (includes ending retained earnings, common stock, contributed capital))
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4. Statement of Cash Flows: various sources and uses of cash during a period of time Frontier Insurance, Inc. Income Statement For the month of May 1, 2009 Sales Revenue $8,100 Rent Expense (1,000) Automobile Expense ( 800) Misc. Expense (250) Salary Expense (1,500) Interest Expense (75) Total Expenses 3,625 Net income $4,475 Frontier Insurance, Inc. Statement of Retained Earnings For the month of May 1, 2009 Beginning Balance $0 Net income 4,475 Subtotal 4,475 Less: Dividends ( 2,000) Ending Retained Earnings $2,475 Frontier Insurance, Inc. Balance Sheet
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acc200finalexamstudyguide - TYPE Sole Proprietorship...

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