| A | B |
|---|
| Free Enterprise System | people are free to produce the goods and services they choose. |
| Profit | The amount of money earned over and above the amount spent to keep the business operating. |
| Loss | More money is spent than earned in a business. |
| Entrepreneur | person(s) who transform ideas for products or services into real-world businesses. |
| Capital | Money supplied by investors |
| Service Business | Provides a needed service for a fee. |
| Merchandising Business | Buys finished products and resells them to individuals or other businesses. |
| Manufacturing Business | Buys raw materials |
| Sole Proprietorship | A business that is owned by one person. |
| Partnership | A business owned by two or more persons who agree to operate the business as co-owners. |
| Corporation | A business organization that is recognized by law to have a life of its own. |
| Charter | The legal permission to form a corporation which spells out the rules under which the corporation is to operate. |
| Accounting System | Is designed to collect, document, and report on business transactions. |
| Manual Accounting System | The accounting information is processed by hand. |
| Computerized Accounting System | Financial information is recorded by entering it into a computer. |
| GAAP | are Generally Accepted Accounting Principles which are the rules that are used to prepare accounting reports. |
| Financial Reports | Summarized information about the financial status of a business. |
| Financial Accounting | focuses on reporting information to external users. |
| Management Accounting | focuses on reporting information to management |
| Business Entity | A business exists independently of its owner’s personal holdings. |
| Accounting Period | A period of time covered by an accounting report. |
| Going Concern | A business is expected to continue indefinitely. |
| Consistency | meaning that the business should use the same accounting techniques |
| Monetary unit assumption | meaning that the business should have one money unit to record its transactions. So everything should be in U.S. dollars! |
