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Advantages and disadvantages of a
partnership
advantages: taxes disadvantages: personal liability
TERM 2
Advantages and disadvantages of a sole
proprietorship
DEFINITION 2
advantage: tax disadvantage: personal liability
TERM 3
Advantages and disadvantages of a
corporation
DEFINITION 3
advantage: lower legal liability disadvantage: taxes
TERM 4
3 business activities
DEFINITION 4
financing investing operating
TERM 5
2 ways of financing
DEFINITION 5
borrowing from creditors selling stocks to investors
borrowing from creditors
notes payable and bonds payable
TERM 7
selling stock to
investors
DEFINITION 7
common stock
TERM 8
investing activities
DEFINITION 8
purchase of resources (assets) needed to operate a business.
assets include: land building equipment cash investments in
debt or equity securities of another company
TERM 9
Revenue
DEFINITION 9
increase in assets resulting in the sale of a product or service
TERM 10
expense
DEFINITION 10
cost of assets consumed or services used in the process of
generating revenues
Cash flow
shows sources of cash during a period and how the cash was
used. shows operating, investing, and financing activities.
TERM 17
A classified balance sheet
includes
DEFINITION 17
current assets long term investments property, plant, and
equipment intangible assets current liabilities long term
liabilities stockholders equity
TERM 18
Current assets
DEFINITION 18
expected to be converted to cash in less than one year ex.
cash, short term investments, receivables, inventories,
prepaid expenses
TERM 19
Long term investments
DEFINITION 19
not expected to be converted to cash within one year ex.
investments of stocks and bonds of other companies
TERM 20
PPE
DEFINITION 20
have long useful lives and used in the daily operation of the
business ex. land, building, machinery, delivery equipment,
and furniture and fixtures
intangible assets
rights, privileges, and competitive advantages ex. franchises,
patents, copyrights, and trademarks
TERM 22
Current liabilities
DEFINITION 22
supposed to be paid within the year ex. accounts payable,
wages payable, bank loans payable, interest payable, taxes
payable
TERM 23
Long term liabilities
DEFINITION 23
expected to be paid after one year ex. bonds payable,
mortgages payable, long term notes payable
TERM 24
Stockholders Equity
DEFINITION 24
the stockholder's net claim on the companies total assets
common stock and retained earnings
TERM 25
earnings per share equation
DEFINITION 25
(net income- preferred stock dividends)/ average common
shares outstanding
