Different Types of Companies and Their Sources of Finance

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Added on  2022/11/30

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This report discusses the background of different types of companies, including sole proprietorship, partnership, private companies, and public companies. It explores their internal and external sources of finance for existing and new product markets. The report provides insights into the various financing options available for each type of company.

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Accounting with
Business

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Contents
MIAN BODY...................................................................................................................................3
Discuss the Background of Different types company along with their external and internal
source of finance for their existing and new product market.................................................3
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2
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INTRODUCTION
Business Accounting is process of gathering and analysing the financial information
related to business activity. It record every business transition and generate better financial
statements (Ballou, Heitger and Stoel., 2018). It is important about different variety of reasons as
it keeping to tabs of overall assets, liabilities, inventory way to grow company that leads to next
productive level. In this report, the topic is sole proprietorship, private and public limited
companies along with cirticaly analyse towards each business form where how they get finance
source through term perspective.
MIAN BODY
Discuss the Background of Different types company along with their external and internal source
of finance for their existing and new product market.
Sole proprietorship: It is also known as sole tradership where single person own the
overall business and invested his or her capital and make it run through individually. In
this there is no legal distinction between the owner for getting any better business entity.
Internal Source of finance:
Borrowing From relatives or friends: This is arrangement and source of internal
finance where proprietorship are more likely to believe in common source where investment are
being to sole business effectively (Birt, Chalmers and Bond., 2020). As it very easier and not
time consuming way to arrangement money for business.
External Source of Finance
Conventional Bank Loan: Many of sole trader are approach bank loans where it is known
as best external source of finance for individual business as well as partnership. In this
situation bank use the sole trader’s personal assets as mortgage and increase the credit for
approving loan.
Partnership: A partnership is an arrangement between two or more person where they
own business operation as well as to share profit and liabilities. In general partnership
company, as all member share both profit and liabilities.
Internal Source of Finance:
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Boost trapping with partnership: This is common source of funding about for new or
expanding partnership is the pocket, deep or other wise partner create themselves for
funds.
External Source of Finance:
Explore venture capital funding: In this partnership business seeking enxternal
source of finance were capital funding from venture stats those business who are ready to
invest for long term profitability (Nielsen., 2018).
Difference and Similarities of Sole Proprietorship and Partnership External source of
finance towards long term.
Basic Conventional Bank Loan Venture Capital Funding
Differences In this sole proprietorship is
seeking for liquidity in monetary
terms to making investment to run
their business to procure resource.
This is outsourcing type of funding
in partners are convince to business
leader to invest in their business
where they can commence their
business towards long run
Similarities It is generally work for attaining
long term goals as well as raise to
profitability for long way
sustainability.
Only one similarity to arrange
capital funding through venture is
to making assure for long term
profit and liabilities would share
equal manner.
Private Business: This is also know as private company where this is privately owned
and might create serious issue stock and have shareholder but their share are do not trade
on specific public exchange issued through IPO.
Internal Source of Finance:
Debt funding: This is mean money can be borrowed through lenders in behalf of
company and it need to pay interest as per the investment amount (Ostaev, Shulus and
Smolin., 2020). Companies are generally required to repay the money with proper
interest through over time.
External Source of Finance:

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Equity Funding: The company which can undertake on better equity investment and
company can sell their portion within company towards an investor. Equity funding
includes share different Equity shares and Preferences shares.
Public Company: This is company that sold all over the portion of itself on basis of
public offering. The main advantage of public company is to tap financial market through
selling stock of equity or bond which raise to capital and cash for project expansion.
Internal Source of Finance:
Family and Friends: This is of easier internal source of finance where relatives or friend
can be conventional to invest money for business expansion.
External Source of Finance
Government back schemes: The business up to 24 months as old can apply for better
government job and also having start up loan facilities for better personal start ups upto
limited certain of amount.
Difference and Similarities of Private Company and Public company External source of
finance towards long term.
Basic Equity Funding Government Back Scheme
Differences In this source of external finance it
only implies when better equity
investment and company which
private firm need to provide their
mortgage to investors.
It is scheme which is
organised for new business
start up as well as other
private and public business
also through government
(Qasim and Kharbat., 2020).
In this there is collective
security which is need to
deposit by the business
person.
Similarities There is system of mortgage which
every private business need to abide
and run their business within
In government there is scheme
which organised by them in
which high interest they
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effective manner. charged which public
company need to provide to
government (Rikhardsson and
Yigitbasioglu, 2018).
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CONCLUSION
It is inferred about Accounting for Business is summarised about different types of
company as well as it also refers about their financial statement and long term finance goals.
To critically analyse about each types of business along with their long term external finace
source that have only motive to raise profitability within long term perspective.
1

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REFERENCES
Books and Journals
Ballou, B., Heitger, D.L. and Stoel, D., 2018. Data-driven decision-making and its impact on
accounting undergraduate curriculum. Journal of Accounting Education, 44, pp.14-24.
Birt, J., Chalmers, K., Maloney, S., Brooks, A., Oliver, J. and Bond, D., 2020. Accounting:
Business reporting for decision making. John Wiley & Sons.
Kimmel, P.D., Weygandt, J.J. and Kieso, D.E., 2018. Financial accounting: Tools for business
decision making. John Wiley & Sons.
Nielsen, S., 2018. Reflections on the applicability of business analytics for management
accounting–and future perspectives for the accountant. Journal of Accounting &
Organizational Change.
Ostaev, G.Y., Shulus, A.A., Mironova, M.V. and Smolin, Y.V., 2020. Accounting agricultural
business from scratch: management accounting, decision making, analysis and
monitoring of business processes. Amazonia Investiga, 9(27), pp.319-332.
Qasim, A. and Kharbat, F.F., 2020. Blockchain technology, business data analytics, and artificial
intelligence: Use in the accounting profession and ideas for inclusion into the
accounting curriculum. Journal of Emerging Technologies in Accounting, 17(1),
pp.107-117.
Rikhardsson, P. and Yigitbasioglu, O., 2018. Business intelligence & analytics in management
accounting research: Status and future focus. International Journal of Accounting
Information Systems, 29, pp.37-58.
Şimşek, H. and Öztürk, G., 2021. Evaluation of the relationship between environmental
accounting and business performance: the case of Istanbul province. Green Finance,
3(1), pp.46-58.
Smith, K.J., Emerson, D.J and Wood, B.G., 2019. An examination of the psychometric
properties of the Connor-Davidson Resilience Scale-10 (CD-RISC10) among
accounting and business students. Journal of Accounting Education, 47, pp.48-62.
Weygandt, J.J., Kimmel, P.D and Aly, I.M., 2018. Managerial Accounting: Tools for Business
Decision-making. John Wiley & Sons.
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