会计英语unit14FormsofBusiness教学教材演示幻灯片.pptVIP

Unit 14 Forms of Business Forms of business Corporations Single proprietorship Partnership Business organizations For accounting purposes, all three forms are separate from their owners. Legally, only corporations are separate from their owners. Ⅰ. Single Proprietorship Definition A single proprietorship is an unincorporated business owned by a person and often managed by the same person. No legal formalities are necessary to organize such businesses and usually business operations can begin with only a limited investment. Features The owner is solely responsible for all debts of the business. The business is a separate entity from the owner. Thus, single proprietor must keep the financial activities of the business from their personal financial activities. Net accumulated investment is not required to be distinguished from profit earned. It is the owner’s option to invest in the business, withdraw from the business, and distribute profit. Ⅰ. Single Proprietorship Advantage Sole proprietorship is easy to start up, subject to fewer regulations relative to other types of businesses, the owner has full autonomy with regard to business decisions. Another advantage is that one takes all the profits of the business. Ⅰ. Single Proprietorship Disadvantage A business organized as a sole trader will likely have a hard time raising capital since it has to make up for all the businesss funds. The owner of the business has unlimited liability as he is responsible for the businesss debts because he has control over the business. Equity accounts Capital account should be opened. It is not necessary to reclassify equity in the single proprietorship because there are no legal restrictions on the owner’s investment or withdrawals. There is no need to distinguish initial or capital from subsequent investment. All final changes of the owner’s equity should be reflected in capital account. Ⅰ. Single Proprietorship Withdrawal as a temporary should