Flashcards in Chapter#2A: Forms of Business Ownership Deck (16)
What is a sole proprietorship?
it's when a business is owned by a single individual
How big are Sole proprietorship?
They tend to be small Retail businesses or businesses where the owner provides most of the services to his clients
What is a Partnership?
It's when a number of owners join together and create one business
What is a partnership agreement?
its when all partners sign and establish rules about how the business is going to be run
What is an example of a partnership?
Law Firms and accounting firms
What must the bookkeeper do when it comes to sole proprietorship?
include only those accounts that relate directly to the business
What must the bookkeeper do when it comes to Partnership
you must keep the records of the partnership separate from each of the partners personal records
What is a corporation?
a business owned by one or more individuals who are known as shareholders?
What are the shareholders responsibilities?
responsible for debts of the company is limited to the amount they invested in the company
What are Board of Directors?
they oversee the management of the company
What do Capital accounts represent?
The amount of owners equity for each partner
What are Drawing accounts?
are used to record the amounts withdrawn by each partner
What is the Income Summary Account?
is used in the closing process for transferring the balances of the revenue and expense account to the partners capital accounts
What are the two accounts in Shareholders Equity?
Share Capital Accounts and Retained Earnings
What are share Capital accounts?
they are accounts in which you would record the amount invested in the business by shareholders