Officers of the corporation, who are generally not the owners, manage a corporation. Advantages of the corporate form of organization are the limited liability provision for owners and the ease of transferability of ownership. This form requires a formal legal document called the Articles of Incorporation, the appointment of a Board of Directors, and the formal recording of the Minutes reflecting the deliberations of the corporation. Describe the content and purposes of the income statement, statement of retained earnings, balance sheet, and statement of cash flows. Assets are items of value which are owned by the business, e.g. cash, accounts receivable, and equipment .
Liabilities are debts owed by the firm, e.g. accounts payable and loans payable .
Stockholders' equity is the owners' residual interest in the business and is equal to assets minus liabilities. It consists of the stockholders' investment in the business plus profits made by the business, which have not been withdrawn from the business. Profitability is measured as the difference between the revenues generated and the expenses incurred to produce those revenues. Revenues are increases in owners' equity resulting from transactions with customers. They usually represent inflows of assets resulting from the sale of products or the rendering of services to customers.