Accounting for Business: Types of Enterprises, Share Capital and Long Term Debts

ACCOUNTING FOR
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Existence of three different type of enterprises...........................................................................3
Difference between major forms of share capital and long term debts.......................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Sole trader, partnership and companies are the major three form of business organization.
However, they vary in many aspects but still they exist in the corporate world. The running of
business requires a high need of funds which may be raised from various sources including issue
of shares or the debts. This report discusses the existence of major form of business along with a
distinguishment of types of share capital and long terms debts.
MAIN BODY
Existence of three different type of enterprises
Sole traders:
It refers to a type of business under which there is only one individual or owner. This
means it is a form of business which is own and run by a single individual and there is no legal
distinction in respect to business entity and owner (Cribb, Miller and Pope, 2019).
The reason because of which it still exists are:
 This is the simplest form of business.
 Formation of this business is easy and does not require registration.
 There is limited government intervention in case of sole trader business. Also there is no
specific law which govern this business.
 There is no fear of profit or loss because all the profit, loss as well as decision making is
done by owner.
For example: J.C. Penney
Partnership:
It can be defined as a business under which 2 or more than 2 person agree to start a
business. The sharing of profit as well as loss is made between the partners. This business can be
formulating either in an informal manner including oral conversation or it can also be form with
written agreement which is called partnership deed (Wells, 2021). All the terms and conditions,
rights as well as duties and various other detail of the business is written on the deed. Here all the
losses are personally share by the partners. Also every partner makes payment of tax of its share
of capital. This business is governed by the Partnership Act 1890.