HCAD760 Module 1
Accounting - answer measurement in financial (dollar) terms of events that reflect the
resources, operations, and financing of an organization
Financial Management - answer provides the theory, concepts, and tools necessary to
help managers make better financial decisions
Characteristics of a business - answer• Obtains financing from marketplace
• Uses funds to buy assets
• Operates the assets to provide goods or services
Sells the goods or services to create revenue
4 Cs of finance - answer1) Cost minimization 2) Cash sufficiency 3) Capital access 4)
Control of financial resources
Proprietorship - answer business owned by a single individual
Partnership - answer a business owned by two or more people
Corporation - answer Legal business directly separate from owners or management.
Advantages of Proprietorship & Partnership - answerease of formation, few regulations,
no corp. income taxes
Disadvantages of Proprietorship & Partnership - answerlimited life, difficult to transfer
ownership, unlimited liability
Advantages & Disadvantages of Corporations - answerAdvantages: unlimited life, easy
transfer of ownership, limited liability, ease of raising capital
Disadvantages: Cost of formation and reporting, double taxation for investor-owned
corporations
Hybrid forms of Organization - answerLimited liability partnership, limited liability
corporation
Investor Owned Corporations - answerinvestors become owners by purchasing shares
of stock.
Stockholders have-right of control, claim on residual earnings & residual liquidation
proceeds. Expect return on investment
Pay Property, income & sales taxes
Managers concerned with satisfying stockholders
Accounting - answer measurement in financial (dollar) terms of events that reflect the
resources, operations, and financing of an organization
Financial Management - answer provides the theory, concepts, and tools necessary to
help managers make better financial decisions
Characteristics of a business - answer• Obtains financing from marketplace
• Uses funds to buy assets
• Operates the assets to provide goods or services
Sells the goods or services to create revenue
4 Cs of finance - answer1) Cost minimization 2) Cash sufficiency 3) Capital access 4)
Control of financial resources
Proprietorship - answer business owned by a single individual
Partnership - answer a business owned by two or more people
Corporation - answer Legal business directly separate from owners or management.
Advantages of Proprietorship & Partnership - answerease of formation, few regulations,
no corp. income taxes
Disadvantages of Proprietorship & Partnership - answerlimited life, difficult to transfer
ownership, unlimited liability
Advantages & Disadvantages of Corporations - answerAdvantages: unlimited life, easy
transfer of ownership, limited liability, ease of raising capital
Disadvantages: Cost of formation and reporting, double taxation for investor-owned
corporations
Hybrid forms of Organization - answerLimited liability partnership, limited liability
corporation
Investor Owned Corporations - answerinvestors become owners by purchasing shares
of stock.
Stockholders have-right of control, claim on residual earnings & residual liquidation
proceeds. Expect return on investment
Pay Property, income & sales taxes
Managers concerned with satisfying stockholders
