What type of income or profit does an investor expect to receive in exchange for providing financial resources? What time of income does a creditor expect from providing financial resources to an organization or business?
Investors expect a distribution of the business's profits as a return on their financial investment (capital allocation).
Creditors lend financial resources to businesses and receive interest as a return or profit on the loan.
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Accounting
- The language of business
- Describe a non-for-profit or nonprofit enterprise. What is the motivation for this type of entity?
- Distinguish between elements of financial statements and accounts.
- What role do assets play in business profitability?
- To whom do the assets of a business belong?
- Describe the differences between creditors and investors.
- Name the accounting term used to describe a business's obligations to creditors.
- What is the accounting equation? Describe each of its three components.
- Who ultimately bears the risk and collects the rewards associated with operating a business?
- What does a double-entry bookkeeping system mean?
- How does acquiring capital from owners affect the accounting equation?
- What is the difference between assets that are acquired by issuing common stock and those that are acquired by using retained earnings?
- How does earnings revenue affect the accounting equation?
- What are the three primary sources of assets?
- What is the source of retained earnings?
- How does distributing assets (paying dividends) to owners affect the accounting equation?
- What are the similarities and differences between the dividends and the expenses?
- What four general-purpose financial statements do business enterprises use?
- Which of the general-purpose financial statements provides information about the enterprise at a specific designated date?
- What causes a net loss?
- How are asset accounts usually arranged in the balance sheet?
- How do temporary accounts differ from permanent accounts? Name three temporary accounts. Is retained earnings a temporary or a permanent account?
- What is the historical cost concept and how does it relate to verifiability?
- Which of the general-purpose financial statements provides information about the enterprise at a specific designated date?