Business
Business Finance Finance1–4)
Exam 1 (Chapters ExamStudy
1 Chapters
Guide 1-4
Study this set o nline at: https://www.cram.co m/flashcards/business-finance-exam-1-
chapters-1-4-3788667
Maxi mi zati on of sharehol ders weal th by maki ng deci si ons that wi l l maxi mi ze the
Goal of the f i rm
pri ce of the exi sti ng common stock.
Sol e propri etorshi p A busi ness owned by a si ngl e i ndi vi dual , unl i mi ted l i abi l i ty
A partnershi p i n whi ch al l partners are f ul l y l i abl e f or the i ndebtedness i ncurred
General partnershi p
by the partnershi p.
A partnershi p i n whi ch one or more of the partners has l i mi ted l i abi l i ty, restri cted
Li mi ted partnershi p
to the amount of capi tal he or she i nvests i n the partnershi p.
Corporati on An enti ty that l egal l y f uncti ons separate and apart f rom i ts owners.
A corporati on that, because of speci f i c qual i f i cati ons, i s taxed as though i t were
S-type corporati on
a partnershi p.
A cross between a partnershi p and a corporati on under whi ch the owners retai n
Li mi ted l i abi l i ty company (LLC)
l i mi ted l i abi l i ty but the company i s run and i s taxed l i ke a partnershi p.
Gross prof i t Sal es (or revenue) mi nus the cost of goods sol d.
, Business
Business Finance Finance1–4)
Exam 1 (Chapters ExamStudy
1 Chapters
Guide 1-4
Study this set o nline at: https://www.cram.co m/flashcards/business-finance-exam-1-
chapters-1-4-3788667
(earni ngs bef ore i nterest and taxes) Sal es mi nus cost of goods sol d mi nus operati ng
Operati ng i ncome
expenses.
gross prof i t f rom al l sources, except f or al l owabl e excl usi ons, l ess than tax-
T axabl e i ncome
deducti bl e expenses.
D i vi dend excl usi on T ax exempt 70% di vi dends (0.30 x di vi dend amount)
expenses on the i ncome statement to al l ocate the cost of an asset over the course
D epreci ati on
of i t's l i f espan.
Capi tal gai n Gai ns f rom sel l i ng any asset that i s not part of the ordi nary operati on.
Loss f rom sel l i ng any asset that i s l ess than the ori gi nal cost of the asset and i s not
Capi tal l oss
part of ordi nary operati on
may be carri ed back 3 years or f orward up to 5 years and appl i ed agai nst net
Net capi tal l oss carry back/carry f orward
capi tal gai ns.
Operati ng l oss carryback/carry f orward may be carri ed back 2 years or f orward up to 20 years.
Business Finance Finance1–4)
Exam 1 (Chapters ExamStudy
1 Chapters
Guide 1-4
Study this set o nline at: https://www.cram.co m/flashcards/business-finance-exam-1-
chapters-1-4-3788667
Maxi mi zati on of sharehol ders weal th by maki ng deci si ons that wi l l maxi mi ze the
Goal of the f i rm
pri ce of the exi sti ng common stock.
Sol e propri etorshi p A busi ness owned by a si ngl e i ndi vi dual , unl i mi ted l i abi l i ty
A partnershi p i n whi ch al l partners are f ul l y l i abl e f or the i ndebtedness i ncurred
General partnershi p
by the partnershi p.
A partnershi p i n whi ch one or more of the partners has l i mi ted l i abi l i ty, restri cted
Li mi ted partnershi p
to the amount of capi tal he or she i nvests i n the partnershi p.
Corporati on An enti ty that l egal l y f uncti ons separate and apart f rom i ts owners.
A corporati on that, because of speci f i c qual i f i cati ons, i s taxed as though i t were
S-type corporati on
a partnershi p.
A cross between a partnershi p and a corporati on under whi ch the owners retai n
Li mi ted l i abi l i ty company (LLC)
l i mi ted l i abi l i ty but the company i s run and i s taxed l i ke a partnershi p.
Gross prof i t Sal es (or revenue) mi nus the cost of goods sol d.
, Business
Business Finance Finance1–4)
Exam 1 (Chapters ExamStudy
1 Chapters
Guide 1-4
Study this set o nline at: https://www.cram.co m/flashcards/business-finance-exam-1-
chapters-1-4-3788667
(earni ngs bef ore i nterest and taxes) Sal es mi nus cost of goods sol d mi nus operati ng
Operati ng i ncome
expenses.
gross prof i t f rom al l sources, except f or al l owabl e excl usi ons, l ess than tax-
T axabl e i ncome
deducti bl e expenses.
D i vi dend excl usi on T ax exempt 70% di vi dends (0.30 x di vi dend amount)
expenses on the i ncome statement to al l ocate the cost of an asset over the course
D epreci ati on
of i t's l i f espan.
Capi tal gai n Gai ns f rom sel l i ng any asset that i s not part of the ordi nary operati on.
Loss f rom sel l i ng any asset that i s l ess than the ori gi nal cost of the asset and i s not
Capi tal l oss
part of ordi nary operati on
may be carri ed back 3 years or f orward up to 5 years and appl i ed agai nst net
Net capi tal l oss carry back/carry f orward
capi tal gai ns.
Operati ng l oss carryback/carry f orward may be carri ed back 2 years or f orward up to 20 years.
