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ACCT 250 Week 1 Day 1 Notes

by: Salin Notetaker

ACCT 250 Week 1 Day 1 Notes ACCT 250

Marketplace > University of Arizona > Accounting > ACCT 250 > ACCT 250 Week 1 Day 1 Notes
Salin Notetaker
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About this Document

This lecture covers the first half of chapter 1: The Role of Accounting in Business. These are the topics discussed: 3 types of businesses, forms of business, considerations in choosing a form of b...
Survey of Accounting
Sherry Silverberg
Class Notes
Accounting, business, Proprietorship, Partnership, Corporation, LLC, stakeholders, financing, investing, Operating, accounting250




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This 3 page Class Notes was uploaded by Salin Notetaker on Thursday July 28, 2016. The Class Notes belongs to ACCT 250 at University of Arizona taught by Sherry Silverberg in Summer 2016. Since its upload, it has received 5 views. For similar materials see Survey of Accounting in Accounting at University of Arizona.

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Date Created: 07/28/16
August 23rd Chapter 1: The Role of Accounting in Business Accounting: 1. The financial of record keeping in business. 2. Dollars you receive and payout (transactions). 3. Produce financial statements for external uses 3 types of businesses: 1. Service Business: Provide services rather than products to customers Ex: Airline, Hospital, Law Firm (does not really have inventory) 2. Manufacturing Business: Change basic inputs into products that are sold to customers Ex: Dell, Apple, Ford (taking raw materials and turning them to finished goods) 3. Merchandising business: Sell products they purchase from other businesses to customers. Ex: Nordstrom, Macy’s, Target (buying inventory, markup, sell to customers) Forms of business: 1. Proprietorship: 1 owner, unlimited liability (downside) 2. Partnership: 2 or more people, unlimited liability (downside) 3. Corporation: harder to set up, but separate legal entity, limited liability. (owner of corporation’s personal assets are safe) 4. Limited liability corporation: like a partnership (easier to set up) but has limited liability Considerations in choosing a form of business 1. Ease of formation: proprietorship/partnership are easier to set up 2. Ability to raise capital/money: a corporation’s ability to raise money is easier than proprietorship/partnership 3. Legal liability: LLC/Corporation has the advantage. 4. Taxation: depends on how much money you’ll make. 5. Limitation on life: no limit for corporation, the corporation lives on beyond the life of the owner. (if you die, what happens to your business?) Form Ease Legal Taxation Limited Capital Liability Life Access Proprietors Simple No limit Nontaxabl Yes Limited hip e Partnership Simple No limit Nontaxabl Yes Average e Corporatio Complex Limited Taxable No Extensive n August 23rd LLC Moderat Limited Nontaxabl Yes Average e e August 23rd How do businesses make money? By providing goods and services to customers so that they can make a profit (revenues > expenses). To maximize their profits, companies may use one of the following strategies:  Premium price strategy  Low cost strategy. Business stakeholders Business Stakeholder Interest in the Business Examples Capital market Providers of major Banks, owners, stakeholders financing for the stockholders business Product or service Buyers of products or Customers and market stakeholders services and vendors to suppliers the business Government Collect taxes and fees Federal, state, and city stakeholders from the business and governments its employees Internal stakeholders Individuals employed Employers and by the business managers Three business activities of financing, investing, operating 1. Financing: getting outside money Borrowing from a third party ex: bank (debt financing) Stockholders investing in the business (equity financing) 2. Investing: purchasing assets needed to operate Use business assets/cash to acquire more assets- tangible assets Purchasing machinery, computers, buildings, intangible patent 3. Operating: actual business operations Use assets to earn revenues -> not profit Revenue > expenses = net income Revenues < expenses = net loss


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