Accounting for Business

Running head: ACCOUNTING FOR BUSINESS
Accounting for Business
Name of the Student:
Name of the University:
Author’s Note

ACCOUNTING FOR BUSINESS
1
Table of Contents
Introduction........................................................................................................................2
Discussion..........................................................................................................................2
Different Form of Business............................................................................................2
Options of Financing......................................................................................................3
Raising of Finances........................................................................................................3
Accounting Information..................................................................................................3
Accounting Skills and Knowledge..................................................................................3
Conclusion.........................................................................................................................4
Reference..........................................................................................................................5

ACCOUNTING FOR BUSINESS
2
Introduction
The process of accounting is considered to be important for preparing the
financial statements and depicting the financial performance of the business during a
particular period. The assessment revolves around the decision of Tim to purchase a
new shop for the purpose of starting off his new business (Rothaermel 2013). The
decision to open a new business would require appropriate source of financing and the
same would also be discussed in the assignment. Furthermore, advantages and
disadvantages of different form of business would be shown in the discussion as well.
Discussion
Different Form of Business
There are variety of options available to Tim for opening a new business but the
same needs to be taken considering the size of operations and future goals and
objectives of the business. The options which are available to Tim for opening a new
business considering the different business structures are:
Sole Proprietorship
The sole proprietorship is a form of business which is managed by single person
and all the major decisions are taken by the owner of the business (Jeston 2014). This
form of business does not have a separate legal existence in the eyes of law and the
associated liabilities for such a business is unlimited for the owner of the business.
Advantages
 This form of business is easier to control and manage considering the small
scale of operations of the business.
 There are no legal obligations required for establishing such a business and also
for winding up the business (Coleman, Cotei and Farhat 2016). Therefore, it is an
appropriate choice for retail sector businesses.
Disadvantages
 The liability of the owner or the sole proprietor is unlimited and would be
personally liable for all losses of the business.
 The main difficulty which arises in this form of business is in relation to raising of
appropriate loans for financing the activities of the business.
Partnership
In a partnership form of business, the operations of the business are managed by
two or more persons making them joint owners of the business and the profits and
losses of the business are shared in profit sharing ratio as determined by the partners in
their partnership agreement. In a partnership form of business, registration is optional
for the management of the company.
Advantages
 The ownership of the business is jointly managed by the partners and therefore
expertise can be maintained in managing the operations of the business as
duties and responsibilities of the business is appropriately segregated.
 The partners are able to raise capital easily from the market due to its nature of
the business.
Disadvantages