Four Forms of Business Organization 2 Essay

1363 Words Mar 19th, 2012 6 Pages
Acc/561 Week 2 Assignment Instructor: Mark Student: G Toe Washington November 14, 2011

Abstract This is an analysis of the four different forms of business organization. It is a review of the advantages and disadvantages of each form, including the tax, legal, and, accounting implications that surround them. The different type of financial statements associated with each form of business organization is also discussed. In this paper, based
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(3) Possibility of bigger resources than the sole proprietorship, hence financial institutions may grant bigger loans upon taking into consideration the combined resources of the partners. Disadvantages are: (1) It lacks stability. The death or withdrawal of a partner dissolves the partnership, and it needs complete reorganization to continue nits operations. (3) The partners are subject to unlimited liability, except limited partners, who liabilities are confined to their share of capital contributions. C Corporation This is a business established as a separate legal entity from its owners. The operational decisions of the business are made by the board of directors. The owners are not held liable for the liabilities of the organization and the business pays its own taxes, known as the corporate income tax. Hence, a corporation is recognized by law as a body with its own powers and liabilities separate from its individual members. There are four financial statements required of this form of business; income statement, balance sheet, cash flow statement, and the statement of owner’s equity. Advantages: (1) Owners have no liability. All personal properties of the shareholders are excluded from financial claims of the creditors. (2) It has the most effective means of raising cash for the purpose of operations by selling stocks and bonds. (3) It has permanent existence. Hence, the transfer of

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