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Cornerstones of Financial Accounti...

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Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 1-32 Forms of Business Organizations

Listed below are definitions, examples, or descriptions related to business entities.

1. Owned by one person

2. Can make and sell goods (manufacturing)

3. Owned by more than one person

4. Can sell goods (merchandising)

5. Can provide and sell services

6. Legally, a separate entity from the owner(s)

7. A law firm owned by some of the employees who are each liable for the financial obligations of the entity

8. The Coca-Cola Company

Required:

  1. For each of the three types of business entities (sole proprietorship, partnership, and corporation), select as many of the definitions, examples, or descriptions as apply to that type of entity.
  2. CONCEPTUAL CONNECTION Explain the advantages and disadvantages of each type of business entity.

To determine

Concept Introduction:

Forms of business organization: A business can be started in any form of business organization. The form of business organization can be a sole proprietorship, a general partnership, a limited partnership, a limited liability partnership, S corporation, a corporation or a limited liability company.

Requirement-1:

To Indicate:

The definition, examples or description applicable for each type of business entity.

Explanation
  • Partnership: Limited partnership is the form of partnership having more than one owner. It is a type of partnership under which a partner has unlimited liability and other partners have limited liabilities. It limits the liability of a limited partner to the extent of his capital contribution or a specified amount. The partner with limited liability shall not be liable for any contribution over and above the limit.
  • S Corporation: Subchapter (S) corporation is a type of corporation made under specific Internal Revenue Code requirements. S corporation can avoid the double taxation of dividend declared by it in the hands of shareholders.
  • Limited liability Companies: Limited Liability Company is the form of a corporation which blends the characteristics of a corporation and a partnership as well. In case of a Limited Liability Company, the liability of owners is limited as incorporation and taxation flow as in the partnership.

The definition, examples or description applicable for each type of business entity are explained as follows:

    Sole Proprietorship:
    1. Owned by one person
    2. Can Make and sell Goods (Manufacturing)
    4. Can sell Goods (Merchandising)
    5...
To determine

Concept Introduction:

Forms of business organization: A business can be started in any form of business organization. The form of business organization can be a sole proprietorship, a general partnership, a limited partnership, a limited liability partnership, S corporation, a corporation or a limited liability company.

Requirement-2:

To Indicate:

The advantages and disadvantages for each type of business entity.

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