-a business that provides services to customers for a fee

-a business that buys goods, adds value, and sells goods to customers

-a business that converts raw materials into products

-makes the product it sells

-one and only one owner

-business entity, but not legal entity

-not taxed as a separate legal entity

-limited life

-unlimited liability

-two or more owners

-business entity, but not legal entity

-not taxed as a separate legal entity

-limited life

-unlimited liability

-mutual agency

-one or more owners

-business and legal entity

-double taxation

-unlimited life

-limited liability

-marketing

-human resources

-production and operations

-finance

-accounting and information systems

-customer focused

-responsible for determining the wants and needs of customers and develop a system for distributing goods and services to meet customer demand

-customer satisfaction

-customer retention

-product

-price

-promotion and distribution

-determine selling prices

-evaluate distribution channels

-evaluate marketing success

-employee focused

-responsible for ensuring employees are given opportunities to succeed in a safe work environment

-continuing eduation of employees

-health and safety of the workforce

-diversity in the workforce

-determine employee's monthly, retirement, and vacation earnings

-operations focused

-responsible for providing useful information to the other functional areas and external parties

-the backbone of the business (the infrastructure)

-ensuring users receive the information they need, when they need it, in a form that is appropriate for their needs

-financial resources focused

-responsible for managing the financial resources of the business

-when and where to raise capital, where to invest that capital

-evaluate investment proposals (10%)

-determine the cost of capital (5%)

-manage cash flow

-user focused

-responsible for providing useful information to the other functional areas and external parties

-backbone of the business (infrastructure)

-accounting is a system to provide decision makers with useful, relevant, and timely information

-language of business

-formed to provide goods or services for the purpose of makine a profit for its owner or owners

-for profit firm

-not for profit firm

-lenders

-investors

-management

-suppliers and customers

-employees

-competitors

-government agencies

-the press

-the set of reporting standards that must be followed in the financial statements of all companies that sell their stock to the public in the US

-includes accounting framework, related accounting lae, rules, and accounting standards

-the current body "in charge" of determining GAAP

-a group of professional business people, accountants, and accounting scholars who have the responsibility of setting current accounting standards

-pronouncements from this group are called Statements of Financial Accounting Standards (SFAS)

-the financial statements of a businesss do not include any information about the finances of individual owners or other companies

-personal assets are not part of the business

-assume a company will continue to remain in business for the foreseeable future

-implies that accounting records can continuee from one period to the next

-money is the measurement tool of economic activity

-divide the life of a business into time periods to provide financial reports about the company's performance during those time periods

-cannot exceed 1 year in length, but may be shorter, such as 1 month

-resources owned by a business

-the rights to use resources that have expected future economic benefit

-likely to be used or turned into cash within a year

-likley to provide economic benefit for more than a year

-the amounts of money owed by business to others

-likely to be paid within a year

-obligations that will not be paid or satisfied within a year

-the owners' claims to the assets of the company

what are the two ways owners can create equity in a company

-contributed capital

-make a profit

-assests

-liabilities

-owners equity

the accounting equation

(both versions)

assets = liabilities + owners' equity

assets = liabilities + capital + revenues - expenses - dividends

-revenues

-expenses

-dividends

-increases in owners' equity/retained earnings from sales of goods or services

-amount earned from providing goods or services to or for customers

-the decreases in owners' equity/retained earning resulting from the costs incurred in order to earn revenues

-when expenses are incurred, the net assets of the business decrease, resulting in a decrease in owners' equity

-decrease in owners' equity/retained earnings

-recorded when owners' money is given to them to compensate for their investment

-income statements

-statement of changes in owners' equity

-balance sheet

-statement of cash flow

income statement

(Profit and Loss Statement / Statement of Operations)

-shows the net income of the company for a period of time

-it represents financial performance over a cetain time period

revenues - expenses = net income

-income is the difference between the cash received from customers and the cash paid to employees and other suppliers of goods and service

-revenue is recognized when the cash is received

-expense is recorded only when the cash is paid

-not considered a GAAP method

-income is the difference between revenue earned and the expenses incurred during the period, regaurdless of when cash is paid or received

-revenue is recognized when revenue is earned

-expenses are recorded when resources are utilized to earn revenue

-this is a GAAP method as it represents economic reality

-shows the changes that occured in owners' equity during the period of time covered by the income statement

-investment by owners (capital stock)

-distribution to owners (dividend)

-net income

-designed to show the amount of the company's assets, liabilities, and owners' equity at the end of the fiscal year

-list of all the cash that has come into a business and all the cash that has gone out of the business during a specific period

-has 3 sections

-operating activities

-investing activities

-financing activities