BUS-111 Lecture Notes - Lecture 2: Financial Statement
Document Summary
Businesses make purchases from other businesses in the form of "credit: payment expected after certain period of time. Creditor - business that grants extended payment term to other businesses. Lender - bank or institution that"s purpose is lending 23610 with repayment period and interest. Lending 23610 involves risk, creditors and lenders have to decide whether funds will be repaid. Profit inflow of resource = greater than outflow of resource or revenues company generates is larger than expenses. Borrowing from lender (debt financing) (ex) retailer buys printer for and sells for -> profit of . Advantage: business not committed to specific payback schedule. Disadvantage: admin costs are high = expensive way to raise capital. Sec regulates corporations with shares listed on stock market through required periodic filings. Issues regulations and provides oversight of financial market. Customers: customers knowingly/unknowingly has stake in financial performance of busines, businesses are also customers (ex) business purchases products from other businesses.
