ACCT-Ch1

ACCT-Ch1 - Accounting is an Information System That...

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Unformatted text preview: Accounting is an Information System That Identifies records communicates Economic Events To Interested Parties Primary Forms of Business Organization Sole Proprietorship – a business owned by _one__ person (you are the business-personal stuff included) 1. Unlimited Liability-if sued they can take it all 2. Control 3. Limited Resources 4. No business income tax 5. Owner pays personal income tax on net income Partnership – a business owned by _two__ or more people 1. Unlimited Liability-can still get everything if sued 2. Share Control 3. Additional Resources 4. No business income tax 5. Owner pays personal income tax on net income Corporation – a separate legal entity 1. Limited Liability 2. Controlled by Owners that are called shareholders or stockholders 3. Entity pays business income tax 4. Owner pays personal income tax on dividends (dividends are profits distributed 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)- 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. • Rule-setting bodies are: • Financial Accounting Standards Board (private sector) (FASB) • Securities and Exchange Commission (public sector) (SEC) • American Institute of Certified Public Accountants (private sector) (AICPA) Interested Parties 1. External users (outside) a. External reporting is called financial accounting b. Provides financial statements, which...
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This note was uploaded on 04/07/2008 for the course ACCT 2001 taught by Professor Lowe during the Spring '08 term at LSU.

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ACCT-Ch1 - Accounting is an Information System That...

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