A business organized by one or more people who invest in the business and act as a single organization
corporation
A business with the same or similar products, services, customer service, inventory, operations, and marketing plans as another business
franchise
A business owned, operated, and managed by one person
sole proprietorship
A business owned, operated, and managed by two or more people
partnership
If an owner desires complete control of the business, which form of organization is best?
sole proprietorship
If the owner of a sole proprietorship dies, what happens to the business?
The business closes.
A registered agent is
the person who receives legal information about the business
Shares represent _____.
ownership in a corporation
Articles of incorporation must be filed in the _____ in which the corporation plans to operate.
state
The process of collecting and reporting financial information to internal and external users is
accounting
Any cash or items owned by the business that have worth
assets
A form of payment whereby a customer buys now, receives the goods or services, and pays later
credit
The U.S. standards for organizing and reporting financial information to maintain consistency
Generally Accepted Accounting Principles (GAAP)
Parties involved in transactions must act honestly refers to which GAAP principle
Principle of Good Faith
Organizations must apply consistent standards in financial reporting refers to which GAAP principle
Principle of Consistency
accounting equation
assets = liabilities + equity
Money a business owes to creditors for credit purchases
accounts payable
Money owed to the company
accounts receivable
Amounts owed to creditors
liabilities
The formula that represents straight line depreciation
(asset cost - resale value)/useful life
A formal request to examine and review financial information and documents
audit
The amount of money used to purchase or manufacture merchandise for sale
cost of goods sold
Gross profit on sales
sales minus the cost of goods sold
Profit before taxes
gross profit on sales minus expenses
Income received from the sale of goods or services
revenue
Financial instruments sold by corporations or municipalities to fund projects
bonds
Security in the event the company does not repay the loan
collateral
Obtaining a loan or selling bonds with a promise to pay back borrowed cash with interest
debt financing
Raising money by selling shares to investors
equity financing
A percentage the lender charges to loan money
interest
Money stockholders invested in the company
paid-in capital
A financial statement used to measure the changes in stock ownership and retained earnings
statement of stockholders’ equity and retained earnings
Only selling bonds to fund an expansion project is considered ____ financing.
debt
Common and preferred stock is any example of
equity
Paid-in capital on the statement of stockholders’ equity and retained earnings is the ________.
money stockholders invested in the company
__________ can sell bonds.
Municipalities and corporations
Paying rent on a company-owned building
operating outflow
Selling land for a profit. The financial transaction is considered a(n) ____ on the statement of cash flows.
investing inflow
Selling bonds to an investor. The financial transaction is considered a(n) ____ on the statement of cash flows.
financing inflow
A corporation receives cash from a customer to purchase a product. The financial transaction is considered a(n) ____ on the statement of cash flows.
operating cash inflow
A corporation pays rent on their building. The financial transaction is considered a(n) ____ on the statement of cash flows.
operating cash outflow