FORMS OF BUSINESS ORGANIZATIONS:
The accounting procedures depend on which form the organization takes.
1. Sole Proprietorship - has single owner called proprietor. The accounting records
of the sole proprietorship do not include the proprietor’s personal financial records.
2. Partnership - owned and operated by two or more persons who contribute money,
property, or industry to a common fund, with the intention of dividing the profit among
themselves.
General Partnership - all partners share the benefits and drawbacks of the
business. Directly involved in management operations and are legally liable for
business’ debts.
Limited Partnership - are not involved in or have minimal control over
business operations. Their personal assets are protected from debts or claims,
except for their financial investments in the company.
Limited Liability Partnership - the liability of all partners is based on their
actual participation or role in the company. They are only legally liable for the
operations they directly handle or are involved in.
3. Corporation - owned by its shareholders/stockholders. An artificial being created
by law, thus, the corporation is a separate legal entity. The stockholders are not
personally liable for the corporation’s debts.
TYPES OF BUSINESSES:
1. Servicing - perform services for a fee.
2. Merchandising - purchase goods that are ready for sale and then sell the products
to other companies or final customers. A retail business / buy and sell.
Types of Merchandisers:
Wholesaler - who buys in bulk and sells the goods to a retailer.
Retailer - who sells products to end users.
3. Manufacturing - buy raw materials, convert them into products, and then sell the
products to other companies or final customers.
Micro >>>>>>>> Small >>>>>>>> Medium
Enterprises
ACTIVITIES IN BUSINESS ORGANIZATIONS:
1. Financing - methods used to obtain financial resources and how to manage these
resources. Primary sources are owners and creditors, such as banks and suppliers.
2. Investing - managers use capital to from financing activities to acquire other
resources and transform it from one to another form. These activities involve the
selection and management including disposal replacement of long-term resources.
Efficient - provides goods and services at low costs relative to their selling
price.
