FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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Question
Chapter 1, Problem 1.1BE
To determine
Introduction:
The business organization consists of three basic forms of business organizations as shown in the below figure:
Forms of Business Organization
Figure (1)
To match: The forms of basic business organization and the set of characteristics related to basic forms of business organization.
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B. Analysis of Information. Presented below are possible advantages and disadvantages. You are to determine in the first column whether the item pertains to an advantage or disadvantage. On the second column, you are to determine the related business organization. Item 1 has been done for you.Information Advantage or DisadvantageBusiness Organization1. In the event of bankruptcy, business creditors can run after the personal assets of the owners.Disadvantage Sole Proprietorship Partnership2. Involvement of more persons in the business, hence more sources of expertise as compared to the most simple business organization.3. Transferability of ownership4. Limited life5. Business organization as a juridical or separate person6. Corporate existence of 50 years, renewable7. Most limited source of funding8. Most regulated business organization9. Double taxation10. Limited liability11. Unlimited liability
Q: Compare the characteristics of organizational and legal forms of enterprises:
Criteria
The organizational and legal form
Individual entrepreneur
Economic partnership
(LLC)
Economic society
(JSC)
Simplicity of the creation
Control over the activities
Liability of the owners
Investment Liquidity*
Period of existence
+ Choose one nature of organization (SINGLE PROPRIETOR, PARTNERSHIP,
CORPORATION)
+ Based on your choice you need to cite the following
+ Advantages: If your chosen nature of organization in terms of
1. Formation
2. Tax benefits
3. Decision making
Disadvantages: If your chosen nature of organization in terms of
1. Liability
2. Taxes
3. Lack of "continuity"
4. Difficulty in raising capital
Chapter 1 Solutions
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
Ch. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Accounting is ingrained in our society and is...Ch. 1 - Prob. 5QCh. 1 - Prob. 6QCh. 1 - What are the three main types of business...Ch. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - What are the three main categories of the...Ch. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Which of these items are liabilities of White...Ch. 1 - How are each of the following financial statements...Ch. 1 - What is the purpose of the management discussion...Ch. 1 - Prob. 19QCh. 1 - Prob. 20QCh. 1 - Prob. 21QCh. 1 - Prob. 1.1BECh. 1 - Match each of the following types of evaluation...Ch. 1 - Indicate in which part of the statement of cash...Ch. 1 - Prob. 1.4BECh. 1 - Prob. 1.6BECh. 1 - Indicate which statement you would examine to find...Ch. 1 - Prob. 1.8BECh. 1 - Prob. 1.9BECh. 1 - Prob. 1.10BECh. 1 - Prob. 1.11BECh. 1 - Prob. 1.1DIECh. 1 - Prob. 1.2DIECh. 1 - Prob. 1.3bDIECh. 1 - Here is a list of words or phi uses discussed in...Ch. 1 - Prob. 1.4ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.12ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.1APCh. 1 - Financial decisions often place heavier emphasis...Ch. 1 - INTERPRETING FINANCIAL STATEMENTS Xerox was not...Ch. 1 - Prob. 1.5EYCTCh. 1 - Prob. 1.9EYCTCh. 1 - Prob. 1.10EYCTCh. 1 - Prob. 1.1IPCh. 1 - Prob. 1.2IPCh. 1 - Prob. 1.3IP
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- Which form of business organization is characterized by having the shortest start-up time and lowest legal costs? Select one: a. partnership b. S-corporation c. proprietorship d. corporationarrow_forwardMatch each corporate characteristic 1 through 8 with the description that best relates to it. Characteristic Descriptions 1. Transferability of ownership 2. Ability to raise large capital amounts 3. Duration of life 4. Legal status Entity with similar rights as individual 5. Ease of formation High because buying stock is attractive 6. Government regulation Indefinite 7. Mutual agency More severe than partnerships and proprietorships 8. Owner authority and control TT TT Oarrow_forward3. Explain the concept of the following Business Ownerships: Sole Proprietorship, Partnership, Corporation, and Cooperation. Describe the advantages and disadvantages of each business.arrow_forward
- Question based on the picture attached. (a) Explain any three (3) differences between maximising profits and maximising shareholders’ wealth. Justify which one should be the goal of a company. (b) Explain any three (3) costs and benefits of partnerships/proprietorships as compared to corporation. Give your opinion which type of organizational structure is preferable.arrow_forwardQ1. When the management of a business is conducted by individuals other than the owners, the business is more likely to be a: partnership. sole proprietorship. general partner. corporation.arrow_forwardNext to each corporate characteristic 1 through 8, enter the letter of the description that best relates to it. 1. Owner authority and control 2. Ease of formation 3. Transferability of ownership 4. Ability to raise large capital amounts 5. Duration of life 6. Owner liability 7. Legal status 8. Tax status of income a. Requires government approval b. Corporate income is taxed c. Separate legal entity d. Readily transferred e. One vote per share f. High ability g. Unlimited h. Limitedarrow_forward
- Identify the advantages of forming a business as an S Corporation. Multiple Choice O owners avoid double taxation and owners have limited liability treated as a separate legal entity and owners avoid double taxation owners have limited liability and corporation's earnings are tax free owner is personally responsible for debts of the business and earnings are reported directlarrow_forward(please correct answer finance question) Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation. Analyze the following for each business structure: steps to form personal liability for owners taxation advantages and disadvantagesarrow_forwardCompare and contrast the three major forms of business organization which are sole proprietorship, partnership and corporation. Also, relate the scope of the role of a financial manager within these business organization.arrow_forward
- Give the pros and cons of using partnership, corporation and any other forms in establishing own accounting firm.arrow_forwardRefer to Chapter 11-1A, page 619: Characteristics of sole proprietorships, partnerships, and corporations Required The three primary types of business organization are proprietorship, partnership, and corporation. Each type has characteristics that distinguish it from the other types. In the left column of the following table write the name of the type of business organization that is most likely to possess the characteristic that is described in the right column of the table. The first item is shown as an example. Business Type Characteristic Proprietorship Owned and operated by a single individual Subject to double taxation Has a retained earnings account on its balance sheet One owner may be held personally liable for actions taken on behalf of the business by different owner Profits benefit a single individual Frequently uses legal agreements to define profit distribution for two or more owners Most highly regulated form of business The business dissolves with the death of its only…arrow_forwardExplain Advantages vs Proprietorship1. Brings greater financial capability to thebusiness.2. Combine special skills, expertise, andexperience to the partners.3. Offers relative freedom and flexibility ofaction in decision-making.Advantages vs Corporation11. Easier and less expensive to organize2. More personal and informalDisadvantages1. Easily dissolved and thus unstable comparedto a corporation.2. Mutual agency and unlimited liability maycreate personal obligations to partners.3. Less effective than a corporation in raisinglarge amounts of capitalarrow_forward
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