(a)
Forms of Organization
There are different types of business organization as per their nature of the formation. The following are the different types of organization:
Sole Proprietorship: An entity which is completely owned by a single person and that person is running the business solely is called sole proprietorship organization. Each and every decision of the organization is taken by the owner and is also responsible for all types of business risks.
Corporation: A business concern where there is a separate legal entity and are owned by shareholders are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the corporation to its creditors is limited up to its available resources.
To identify: The form of business organization as per the given situations.
Corporation: A business concern where there is a separate legal entity and are owned by shareholders are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the corporation to its creditors is limited up to its available resources.
To identify: The form of business organization as per the given situations.
(b)
Corporation: A business concern where there is a separate legal entity and are owned by shareholders are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the corporation to its creditors is limited up to its available resources.
To identify: The form of business organization as per the given situations.
(c)
Sole Proprietorship: An entity which is completely owned by a single person and that person is running the business solely is called sole proprietorship organization. Each and every decision of the organization is taken by the owner and is also responsible for all types of business risks.
To identify: The form of business organization as per the given situations.
(d)
Sole Proprietorship: An entity which is completely owned by a single person and that person is running the business solely is called sole proprietorship organization. Each and every decision of the organization is taken by the owner and is also responsible for all types of business risks.
Partnership: Partnership firms are started by two or more individuals joining together. This form of partnership is very easy to establish and there is a shared control. The duties and formalities of the concern are formalized by making a partnership agreement. In this type of company, individuals with similar interest join together and startup a business. As previously stated for sole proprietorship, partnership firms too enjoy tax advantages.
To identify: The form of business organization as per the given situations.
(e)
Corporation: A business concern where there is a separate legal entity and are owned by shareholders are classified as corporation. Transfer of ownership and raising funds are easy in this form of organization. The liabilities of the corporation to its creditors is limited up to its available resources.
To identify: The form of business organization as per the given situations.
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Chapter 1 Solutions
Financial Accounting: Tools for Business Decision Making, 7/E WileyPLUS Card
- Which of the following is not considered a stakeholder of an organization?A. creditorsB. lendersC. employeesD. community residentsE. a business in another industryarrow_forwardIn each case below, I have given a goal that a business might have. What you need to do is to indicate for each whether the goal can better be achieved if the business is organized as a sole proprietorship or as a corporation. goal: to minimize taxes on profits of the business goal: the ability to freely transfer ownership interests in the businessarrow_forwardplease answer correct in detail Identify each of the following characteristics as being an advantage or a disadvantage of the corporate form of business or not applicable to the corporate form of business organization. 4. Unlimited liability of owners  5. Government regulations  6. Seperation of ownership and managementarrow_forward
- 17. When a business engages in corporate social responsibility, it hopes to engender greater goodwill among its various stakeholders. a. How are these expenditures accounted for? b. If the resulting goodwill was capitalized under GAAP, do you believe that acts of corporate social responsibility would increase? (Book: Ethics in Accounting, A Decision Making Approach Author: Gordon Klein CHAPTER 7)arrow_forwardWhich 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_forward12. The principal-agent problem is best defined as: Select one: When the person managing the business for an owner, acts in accordance with the owner's interests When the person managing the business and the person who owns the business are not aligned on the activities of the business When the person managing the business for an owner, acts in a manner that improves the financial well-being of the owner When the person managing the business for an owner, acts in a manner that benefits the shareholdersarrow_forward
- Stakeholders include any one who has financial interest stake or claim in an organization and or what it does. Select one: True Falsearrow_forwardAgency problems are said to be inherent in the corporate form of an organization. Why do you think this is the case?Do you think agency problems arise in a sole proprietorship or a partnership?What steps would you take to reduce agency problems in a so-called typical corporation?arrow_forwardThe advantages of owning a corporation include a. Difficulty in transferring ownership. b. Limited liability. c. Lower taxes. d. Less paperwork.arrow_forward
- Identify one advantage of corporate form of business over a proprietorshiparrow_forwardBusiness Ethics and Corporate Social Responsibility: Do businesses have a responsibility to society or to their shareholders? Explain your answer. Do these responsibilities conflict or work together? How do social and profit responsibility relate to CSR?arrow_forwardDetermine if sole proprietorship, partnership, or corporation. Select all that is applicable between the three forms of business. • greater access to financial resources difficult to liquidate or terminate • separate management from ownershiparrow_forward
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT