Chapter 1

P.8-9
Ethics in finacial repoting

Congress passed Sarbanes Oxley Act (Sox) to reduce unehtical corporate behavior and decrrease the likelyhood of futere corporate scandals.

The two primary souces of outside fund sfor corpoarations are borrowing money(debt finacing) and issuing(selling) shares of stock in exchanges for cash(equity finacing).

Two way to borrow moeny
1. takeing out a loan at a bank
2. borrow directly from investor by isssuing debt securities called bonds

The person whom someoen owed money is creditor.
Amounts owed to creditor is called liabilities.

Note payable = a note promising to pay a certain amount of money at a certain time
Bonds payable = Debt securities sold to investors that must be repaid at particular date some years in the future.

Corporation obtains funds by selling shares of stock to investors.
Common Stock is the term used to describe the total amount paid in by stockholders for the shares they purchase.

P.10-11
Dividends = payment to stockholder on regular basis as long as there us sufficient cash to cover required payment to creditors. Investing activities = Purchasing many resources such as computer and so on and Investing in securities (Stocks or bonds).

Revenues = amounts earned on the sale of these product = the increase in assets or decrease in liabilities resulting from the ales of goods or the performance of the services in the normal course of business.
Types of revenues
1. Sales revenue
2. Service revenue
3. Interest revenue

Account receivable = the right to except payment from that customer in the near future.

Types of expenses
1. Cost of goods sold (such as the cost of ingredient)
2. Selling expenses (such as the cost of salespersons’ salaries)
3. Marketing expenses (such as the cost of advertising)
4. Administrative expenses (such as the salaries of