| A | B |
|---|
| free enterprise system | people can produce the goods and services they choose |
| profit | the amount of money earned over and above the amount spent |
| loss | when businesses spend more money than they earn |
| capital | money that investors, banks, or business owners supply |
| service business | provides a needed service for a fee |
| merchandising business | buys finished products and resells them |
| manufacturing business | manufactures products and sells them |
| sole proprietorship | a business owned by one person |
| partnership | a business owned by two or more persons |
| corporation | a business recognized by law to have a life of its own |
| charter | legal permission that gives a corporation rights and privileges |
| accounting system | collects, documents, and reports on financial transactions |
| manual accounting system | the accounting information is processed by hand |
| computerized accounting system | information is entered into a computer |
| GAAP | rules; also referred to as generally accepted accounting principles |
| financial reports | 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 |
