Chapter 2 Forms of Business Organization（课件）-《实用会计英语》同步教学（大连理工大学出版社）

Forms of Business Organization CHAPTER 2 2-1 2 2 Forms of Business Organization *Sole proprietorships *Partnerships *Corporations Accountants should recognize each form as an economic unit separate from its owners. Legally only the corporation is considered separate from its owners. Simplest form of accounting In this book, we only show accounting for the sole proprietorship. 2-1 Sole Proprietorship Sole Proprietorship 2-1 Sole Proprietorship A business owned by one person is called a sole proprietorship or a single proprietorship. Retail industry Handicrafts Agriculture Forestry Fishery Other service and family workshops The sole proprietorship is prevalent in: 2-1 Sole Proprietorship Personal affair Business affair single proprietorship From the viewpoint of all legal rights and responsibilities, your sole proprietorship business and you are considered to be one and the same. 2-1 Sole Proprietorship The owner directs business activities and may supply all management and labor used by the business. 2-1 Sole Proprietorship Profits Losses 2-1 Sole Proprietorship For business and financial management purposes, it is better to maintain completely separate records for the business and the household. Bank accounts Credit arrangements Business affair Family affair 2-1 Sole Proprietorship Advantages of Sole Proprietorship Simplicity Flexibility A sole proprietorship can be set up, modified, bought, sold or terminated very quickly. The proprietor can change the size and management of the business unit, as he or she desires at any time. The involvement of family members in the business is relatively unrestricted. 2-1 Sole Proprietorship Limitations of Sole Proprietorship Limited liability Limited access to capital and business opportunities Problem of continuity Difficult to measure business financial performance, profitability and loss of equity 2-1 Partnerships Partnership 2-1 Partnerships Partnerships are set up by the owners who