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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

What are the various forms of business organization? What are the advantages and disadvantages of each?

Summary Introduction

To identify: The various forms of business organization and their advantages and disadvantages.

Introduction:

Business organization: The organization which is established with the motive of earning profit is called business organization. The main objective of the business is to earn profit. There are various forms of business organization like proprietorship, partnership, corporation and limited liability partnership.

Proprietorship: A business owned and managed by one person is called proprietorship. The owner of the business is the manager or operator of the business. This form of business requires relatively less amount of capital to start.

Partnership: An association of more than one party with the objective of sharing profit and losses is called partnership. It is one form of business organization where risk is shared among two or more partners for their mutual benefit. The liability of partners is unlimited in partnership. Partnership can be easily formed because the process is simple and there are less complexities in legal rules.

Corporation: A corporation is form of the business organization having separate legal entity which is different from its owners. It is created by the law and it has perpetual succession.

Limited Liability Partnership (LLP): Limited liability partnership is the new form of business organization which is newly introduced and is quite popular these days. The some characteristics are similar to partnership and some are similar to partnership.

Explanation
  • In a proprietorship business a single person has complete responsibility of the business. There are no any delay or problems while investing capital and sharing profit and losses. The decision will be quickly taken and will be easy to bring new changes...

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