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ni beautifulenvy

ni beautifulenvy

USERS OF ACCOUNTING INFORMATION
   • Customers - main sources of income of businesses, acquired goods and services for free. Ex. patrons, clients, people acquiring goods or services of a company for free. Whether or not to build relationship with business, to have aby dealings with the business.
   • Creditors - provides of additional funds when the initial investments of owner is exhausted. Lend resources to business usually in the form of money. Ex. banks, lending, institutions, wealthy individuals, sometimes the government can also lend a resources to a company. Whether or not to lend resources to the business, try to see if the business is not risky before lending funds.
   • Potential Investors - provides of additional funds when the initial investments of owners is exhausted. Invest resources in the business hoping to earn decent returns. Ex. wealthy individuals, other businesses planning to invest. Whether or not to invest in the business, primary concerns is the ability of the business to provide acceptable returns.
   • Government - an external user whose primary role is to regulate businesses, studies financial statement to determine amount of taxes payable. Ex. different government agencies, taxing authorities, government officials. Overseas business operations with the end of goal of improving the company. Checks the accuracy of the financial statement to compute for the correct amount of taxes payable.
   • Academe - uses accounting information primarily for academic purposes. Ex. professors, lecturers, students and researchers. Uses of accounting information in the teaching of accountancy, researchers loopholes and possible improvements in the field of accountancy.
   • General Public - citizens and residents of the country even though they do not plan to transact with the business. Use financial statements to gauge the condition of the economy. Ex. common people not connected with the company. Concerned with the overall performance of the company. Use financial information to estimate economic performance.
   • Management - employees that can nake decisions for the company. Considered the brain of the company. Ex. board of directors, top management, middle level management, supervisors. Uses financial information in making business decisions allows management to identify problems immediately and to respond accordingly.
   • Employees - persons in the company aside from managers and owners of stakeholders. They do not have authority to implement decisions. Ex. laborers, field workers, non-managerial employees. Check if the business is profitable enough to provide compensation and other benefits.
   • Owners of Stockholders - existing investors of the company. Concerned mostly with the profits to the company. Ex. founders of the company, owners, stockholders. partners, proprietorship. Mainly concerned with the returns earned from their investments. Owners taking active roles in the operations of the business, and also make decisions.

FORMS OF BUSINESS
I. Sole Proprietorship
   • a form of business organization with ONLY one owner
   • has no separate of legal existence
   • can take fictitious names (otherwise known as trademark)
   • most common form of business organization because it is the easiest to establish

Advantages
   • ease of formation
   • the owner has full of control of the business
   • the owner can freely mix personal asset with the business asstes
   • owner has all the profits for himself or herself
   • simple taxation

Disadvantages
   • unlimited liability
   • difficulty of raising additional capital
   • owners bias

II. Partnership
• a contract whereby two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves
• may also be formed for the exercise of a profession.

Feature of Partnership
   1. Separate legal existence
   2. Mutual Agency
   3. Unlimited Liability
   4. Limited Life
   5. Co-ownership of partnership
   6. Partnership Agreement

Other Forms of Business Organization with Partnership Characteristics
   1. Limited Partnership
   2. Limited Liability Partnership
   3. Limited Liability Company

General Partnership
   • easier to create than corporation
   • better ability to acquire additional capital than sole proprietorship
   • larger pool of human capital than sole proprietorship

Disadvantages
   • unlimited liability
   • mutual agency
   • limited life

III. Corporation
• an artificial being created by the operation of law, having the right of succession anf the powers, attributes, and properties expressly authorized by law or incident to its existence

Features of Corporation
   • separate legal existence
   • limited liability
   • transferable ownership rights
   • virtually unlimited life
   • corporation management
   • double taxation

3 Types of Dividends
   1. Cash Dividends
   2. Stock Dividends
   3. Property Dividends

Advantages
   • transferable ownership rights
   • limited liability of stockholders
   • virtually unlimited life
   • large pool of human capital

Disadvantages
   • heavily regulated by the government
   • double taxation
   • not easy to form
   • not expensive to form than sole proprietorship and partnership

IV. Cooperative
• a duly registered association of persons, with a common bond of interest who have voluntary joined together to achieve a lawful common social or economic end, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally