These are sample financial accounting examples to help you understand what is financial accounting The accounts of A Ltd as at 30 June 2000 show the followings: Overdraft balance of $3,000 Notes payable of $2,500 Notes receivable of $3,500 Accounts payable of $4,300 Service …
Financial accounting is the preparation and presentation of financial statements to allow users to make economic decisions about the company • Financial statements consist of –Statement of cash flows –Balance sheet –Income statement –Statement of changes in equity Management accounting provides economic information for internal users and provides economic information for internal users that is then reflected in …
The basic forms of business structure are: –Sole Proprietor–Partnership–CompanyThey differ in terms of owner(s)’ liability equity structure funding opportunities decision making responsibilities taxation
A sole proprietor is an individual who controls and manages a business: •The business is not a separate legal entity – meaning that the owner and the business are considered as the same entity•The individual has unlimited liability – meaning that the owner is fully liable for all debts from the company•They have the sole …
Advantages of a Sole Proprietor •Quick, inexpensive and easy to set up and liquidate•Not subject to company regulation•Owner has total autonomy over business decisions•Owner claims all the profits of the business and all the after-tax gains if the business is soldDisadvantages of a Sole Proprietor •Unlimited liability – bears full responsibility for business debts and legal …
•A partnership is when two or more people (up to 20**) who come together to: –carry on a business as partners–share profits or losses according to partnership agreement•share ideas, skills and resources** exclude professional firms such as law firms, accounting firms where partners can go up to 70
Advantages •Easer and simpler to set up than company•Informal business structure hence it is not bound by accounting, auditing and accounting reporting standards •Ability to share knowledge, skills, ability, resources, capital and workload among the partners Disadvantages•Unlimited liability for business debts and obligations by all partners**•Limited life – if one partner dies or withdraws from the business then …
•Company has owners who are known as shareholders •Company has a separate legal entity from the owners — meaning that people who own, control and manage it should be separate group of people (Shareholders own the company, Board of Directors control the company, Directors manage the company)•Shareholders have limited liability –- meaning that the liability …
Advantages •Limited liability for shareholders•Taxation rate is lower than personal tax rate in the top bracket•Business expansion is easier due to legal structure•Fund raising is easier through public share offeringsDisadvantages•Time consuming and expensive to set up•Compliance with company rules and legal requirements is a must •Taxation is based on first dollar of profit•Separation of ownership and …
1. The Income statement for sole proprietor shows income less expenses 2. There is no taxation shown3. The profit will be posted to the capital account in balance sheet / statement of financial statement 4. Note that the title is “income statement FOR THE PERIOD ….” because income statement captures the whole year activity. 5. This is in …