Business organizations owned by one person. The owner often is personally liable for business debts that cannot be paid. Business organizations owned by two or more people. Each partner often is personally liable for
The Basic Accounting Equation
Business Activities and Common Balance Sheet Accounts
SUPERCUTS SUPER SALON Balance Sheet At August 31, 2005 (in U.S. dollars) Assets Current Assets Cash Supplies Total Current Assets Furnishings & Equipment Total Ass
Increases in resources (cash or AR) from sales of goods or services to customers.
Costs that result when resources are sacrificed (i.e., assets used up or liability incurred) to generate revenues.
Peripheral transactions are
Phillips et al Chapter 5
Understanding Financial Statements and the Financial Reporting Environment
Four Parts to a Business
1. Obtain Financing from lenders and
investors, which is used to invest in assets, 2. Invest in Assets, which are used to generate
Inventory Management Ensure sufficient quantities of inventory are available to meet customers needs, Ensure inventory quality meets customers expectations and company standards, and minimize the costs of acquiring and carrying inventory
Inventory goods a
Phillips et al. Chapter 8
A note is a written contract to pay a specific amount, at a specified rate of interest at some specific future date.
$1,200 Term January 5, 2006 Payee
Sixty days Principal theorderof Payableat 8563 No.Due
Reporting and Interpreting Long-Lived Tangible and Intangible Assets
Defining/Classifying Long-Lived Assets
Actively Used in Operations
Will not be used up within the next year
Tangible Physical Substance
Intangible No Physical Substance
Classification of Liabilities
Current Liabilities Long-Term Liabilities
Due within one year or the companys operating cycle, whichever is longer.
Due after one year or the companys operating cycle, whichever is longer.
The amount reported for liabilities