Accounting Case Study

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As we are familiar with the case, we feel that two very important issues have not been addressed which in sufficient detail, given that in the may influence the profitability of the business venture. These are General: (1). The allocation of capital by both the partners and the stockholders (2) Auditing of facilities and services so that expansion can be carried out later or even facility augmentation Economic viability (3) If such extension is meant to augment the profit of the partner, or to offset the losses (either of the two) than what steps can be taken to ensure this is viable. And the best economic process is thought off Let us first examine the conditions via which the initial capital allocation is made. In case of the school, initial capital expenditure was $40,000. This capital is entirely given by Compton and Freidman has no contribution in the capital. Freidman gives his services as the Director of operations (has experience in similar situations before). Compton's initial $40,000 is enough for the initial purchases and the operating capital. At the end of the nonth Feidman takes a salary as the director of the school , the amount bring Rs $2,000. Then afrer Freidman's salary has been credited to freidman's account and debited from Salary account and all other expenses met, the balance remaining is distributed between the partners. The manner of distribution is 75% of the balance to Compton and 25% to Freidman. This method of dividing the profit

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