Accounting Chapter 1-1

Accounting Chapter 1-1 - Accounting Information System...

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Accounting Information System identifies records communicates Economic Events: business activities Interested Parties: Primary Forms of Business Organization 1)Sole Proprietorship – a business owned by one person 1. unlimited liability – you get sued they can take EVERYTHING 2. no business income tax 3. owner pays personal income tax on net income 2)Partnership – a business owned by two or more people 1. unlimited liability – get sued, can take everything
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2. no business income tax 3. owner pays personal income tax on their share of net income 3)Corporation – a separate legal entity owned by stockholders 1. owners are called shareholders or stockholders 2. limited liability – get sued can only have your business (not your personal things) 3. entity pays business income tax 4. Owner pays personal income tax on dividends (distributions of profits to shareholders) The Primary function of accounting is to provide financial information for decision making BUT You Need Rules: 1. Generally Accepted Accounting Principles (GAAP)
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are guidelines that govern how accountants measure , process , and communicate financial information. 2. These rules increase the usefulness of financial reporting. Useful information is relevant , reliable , and comparable . 3. Rule-setting bodies are: Financial Accounting Standards Board (private sector, not the government) (FASB) Securities and Exchange Commission (public sector, government) (SEC) American Institute of Certified Public Accountants (private sector) (AICPA)
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This note was uploaded on 04/07/2008 for the course ANTH ANTH 1003 taught by Professor Demovic during the Spring '08 term at LSU.

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Accounting Chapter 1-1 - Accounting Information System...

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