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