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

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Accounting is an Information System That Identifies records communicates Economic Events To Interested Parties
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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
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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)
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Interested Parties 1.
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