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AU / Public Relations / PR 2110 / What is a sole proprietor?

What is a sole proprietor?

What is a sole proprietor?


School: Auburn University
Department: Public Relations
Course: Principles of Financial Accounting
Professor: Jennifer cornett
Term: Fall 2016
Tags: financial and Accounting
Cost: 50
Name: Test 1 Notes and Terms - Chapter 1 and 2
Description: These are all the notes from the lectures leading up to the test and from the chapters in the book. I have also attached a terms sheet so it's easier for y'all to memorize!!
Uploaded: 05/03/2016
15 Pages 12 Views 9 Unlocks

Assets - Resources that will provide a future benefit

What is a sole proprietor?

Ex. Cash, investments, inventory, accounts receivable, land, buildings, equipment, patent, copyright

● Current: made into cash in the next year, used up, converted into cash within the year

○ Cash

○ Accounts receivable - right to collect an amount due from customers, ○ Inventories

○ Short term investments

● Long term investments

● Property, plant, and equipment

● Intangible assets - provide a benefit to the company for many years ○ Patents, copyrights

● Noncurrent: hold for more than a year, most depreciate over time

Liabilities - Obligations requiring a future sacrifice of a resource

Ex. Accounts payable, salaries payable, unearned sales revenue, interest payable, notes payable, taxes payable, bonds payable

What is financing?

● Current

○ Accounts payable - repay a vendor or supplier for merchandise If you want to learn more check out ucsc bsu

○ Salaries payable - employees

○ Unearned revenue - an obligation to deliver goods or perform a service for which a company has already been paid

○ Interest payable - an obligation to pay interest on money that a

company has borrowed

○ Income taxes payable - an obligation to pay taxes on a company’s


● Long Term liabilities

○ Notes payable - obligation to repay cash borrowed at a future date

○ Bonds payable - interest-bearing note payable issued by corporations in an effort to attract a large amount of investors

Equity - (Stockholder’s equity) difference between assets and liabilities, represents share of assets claimed by owners

What is an asset?

● Ex. Common stock and retained earnings

● Contributed Capital - the owners’ contributions to the company (in shareholder’s equity of a balance sheet) 

● Retained Earnings - accumulation of net income of a company not distributed to owners in the form of dividends

Revenue - increase of assets due to sale

● Ex. Sales revenue, interest income, rent revenue

Expense - cost to produce the revenue, money going out, used to generate revenues ● Ex. Cost of goods sold, salaries expense, rent expense, insurance expense, depreciation expense, advertising expense, utilities expense, repairs andDon't forget about the age old question of physical geology lecture notes

manenance expense, propery axes expense

Net income - Revenue > Expenses

Net loss - Revenue < Expenses

Balance sheet - reports the resources (assets) owned by a company and the claims against those resources (liabilities and stockholders’ equity)

● Accounts Receivable - something a company expects to receive

● Retained Earnings

● Inventory

● Accounts Payable

● Contributed Capital

○ Assets are listed on the balance sheet in order of liquidity or nearness to cash

Liquidity - ability to pay obligations as they become due

Income statement - reports how well a company has performed its operations (revenues, expenses, and income), success or failure, profitability and growth of a


Retained earnings statement - reports how much of the company’s income was retained in the business and how much was distributed to owners We also discuss several other topics like What must happen in order for the lens to become more convex?

Statement of cash flows - reports the sources and uses of a company’s cash, financing activities, investing activities, operating activities If you want to learn more check out econ 190

Operating cycle - average time that it takes a company to purchase goods, resell the goods, and collect the cash from customers (one operating cycle - current asset) Nonoperating activities - revenues and expenses from activities other than the company’s principal operations Don't forget about the age old question of which statement is the most reasonable testable prediction for the hypothesis: “all birds can fly”?

Trial balance - lists all accounts and their balances

Creditor - lends funds to a business entity and expects repayment

Net profit margin = Net income / sales and service revenue

Qualitative Characteristics of Useful Information -

● Relevance - helping users predict future events (predicted value) or providing feedback about prior expectations (confirmatory value)

● Faithful representation - complete, neutral, free from error,

○ Enhancing

■ Comparability - to the past or to other companies If you want to learn more check out on july 8 ray inc sold 100 printers

■ Verifiability - neutral, unbiased,

■ Timeliness - current

■ Understandability - anyone with some accounting knowledge can


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