Types of Business Enterprises and Forms of Share Capital and Long-Term Debt

This report discusses the different types of business enterprises, such as sole trader, partnership, and companies, and the forms of share capital and long-term debt. It also highlights the difference between equity shares and preference shares. The report is relevant for students studying accounting and finance courses.

Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Three different types of the business enterprises........................................................................3
Difference between two forms of share capital and two forms of long term debt......................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Accounting is being referred to as recording of all the financial transactions and
summarising and interpreting the results to the interested parties. For the business accounting is
very essential in order to evaluate that how much profitable the business is. The current report
will outline the various types of business which can be used or exist within the business
environment. Along with this the distinction between the various forms of share capital and the
long-term debt will be outlined within the study.
MAIN BODY
Three different types of the business enterprises
There are different forms of business which can be operated by a person or anyone in
order to buy or sell their products and services within the business environment (Steward and Li,
2018). All these different types of business enterprises have their own distinct features and
benefits. The three different types of business enterprises are as follows-
Sole trader- The sole trader is a type of business where in the individual run the business
on their own. There is no involvement of any other person and all the risk and profits are being
made by the sole trader only (Etim, 2020). All the decisions and responsibilities also rest within
the hands of the sole trader only and no other person can interfere within the working. For
example Ebay
Partnership- On the other hand the partnership is a type of business enterprise where two
or more person comes together in order to run the business with some common objectives.
Within the partnership all the things are decided by both the partners mutually and all the
decisions are also taken by the consent of every partner (Lapinskaya and Manukovskaya, 2019).
The partnership under the UK has been governed by the partnership act 1890. The partnership is
not a separate legal entity and the partners are having unlimited liability. For example, Uber and
Spotify, Apple and Master card and many others.
Companies- The company is another type of business enterprise where in the organisation
is formed in order to sell and buy the goods and services in order to make profits (Wynn and
Jones, 2019). The company can also be referred to as an artificial person or an invisible person
who is being created by the people in order to work. Under the company there is limited liability

of the owner because the company and the owners are separate. Unlike partnership here the
owners are not having unlimited liability and they enjoy the limited liability. All the working is
being taken place in the name of the company only and the owners just have to invest the money
(Rahmanita, Asmaniati and Dewi, 2020). For example, AstraZeneca, Unilever and others
Difference between two forms of share capital and two forms of long term debt
Forms of share capital
Equity shares Preference shares
 The equity shares are the type of shares
which represents the ownership of the
person within company.
 The payment of dividend in case of
equity shareholders is being done after
clearing all the liabilities of the
company (Cumming, Meoli and
Vismara, 2019).
 The voting rights are present in case of
the equity shares.
 Equity shares cannot be converted
within the preference shares anytime.
 In addition to this the equity
shareholders do not have any right to
get the areas of the evidence relating to
the previous years.
 On the other hand the preference shares
are the one which carries a preferential
right on the payment of dividend and
the repayment of the capital (Walthoff‐
Borm, Vanacker and Collewaert, 2018).
This simply means that when the
company will liquidate at that time the
repayment of capital will be first
preferred to the preference
shareholders.
 in against of this the payment of
dividend to the preference shareholders
is a priority and are being done before
equity shareholders.
 In case of preference shares the voting
right is not present to the shareholders.
 But the preference shares can be
converted within the equity shares with
the choice of the person.
 On the other hand the preference
shareholders have the right for the areas
of the dividend in case they are not
being provided with the dividend in the
previous year (Meeuwis and et.al.,

2018).
Forms of long term debt
Bonds Loan
 The bond is a type of long term
instrument which involves the
government or a company to raise
money by selling the bond.
 The bond yield rate by the government
is low but they are safe investment
options (Macaulay, 2017).
 The bonds which are being sold and
purchased within the bond market then
in that case the bond prices can move
up and down like the prices of stock.
 On the other hand, loan refers to as the
taking off money from bank or other
financial institutions the mortgaged or
non mortgage.
 On the other hand the loan interest rates
are higher in case of loans and in case
of unsecured loan the interest rate is
much higher.
 On the other hand in case of loan rate is
generally fixed and the bank lends the
amount of money on the same interest
rate again (Darmouni and Siani, 2021).
CONCLUSION
In the end, above report concluded the fact that accounting is very essential for the
success of the business. The reason behind this fact is that in case the accounting is not being
managed properly then it will not outline the profitability of the business. The above report
evaluated that there are different types of business enterprises which can be followed like sole
trader partnership and companies. For that also analyse that there a different forms of share
capital and long term sources of finance which can be used for public listed companies like
common stock preferred shares and others.

REFERENCES
Books and Journals
Cumming, D., Meoli, M. and Vismara, S., 2019. Investors’ choices between cash and voting
rights: Evidence from dual-class equity crowdfunding. Research Policy, 48(8),
p.103740.
Darmouni, O. and Siani, K., 2021. Crowding out bank loans: Liquidity-driven bond
issuance. Available at SSRN 3693282.
Etim, A.S., 2020. The ICT convergence and impact on women-owned micro and small business
enterprises: an analysis based on information poverty. International Journal of Gender
Studies in Developing Societies, 3(3), pp.271-292.
Lapinskaya, I.P. and Manukovskaya, M.A., 2019. PROPER NAMES OF BUSINESS
ENTERPRISES AS AN OBJECT OF RESEARCH IN MODERN
LINGUISTICS. Scientific Journal Modern Linguistic and Methodical-and-Didactic
Researches, (1), pp.10-20.
Macaulay, F.R., 2017. From ‘Some Theoretical Problems Suggested by the Movements of
Interest Rates, Bond Yield, and Stock Prices in the United States Since 1856’. In Bond
Duration and Immunization (pp. 33-43). Routledge.
Meeuwis, M., Parker, J.A., Schoar, A. and Simester, D.I., 2018. Belief disagreement and
portfolio choice (No. w25108). National Bureau of Economic Research.
Rahmanita, M., Asmaniati, F. and Dewi, T.R., 2020. Profiling Local Business Enterprises and
Direct Effect of Tourism in Villages of Muntei, Madobag and Matotonan, South Siberut,
Mentawai, Indonesia. TRJ Tourism Research Journal, 4(2), pp.199-213.
Steward, F. and Li, C.Q., 2018. Changing patterns of collaboration between research
organizations and business enterprises in technological innovation in
China. Management Issues in China: Volume I, pp.167-188.
Walthoff‐Borm, X., Vanacker, T.R. and Collewaert, V., 2018. Equity crowdfunding, shareholder
structures, and firm performance. Corporate Governance: An International
Review, 26(5), pp.314-330.
Wynn, M. and Jones, P., 2019. Context and entrepreneurship in knowledge transfer partnerships
with small business enterprises. The International Journal of Entrepreneurship and
Innovation, 20(1), pp.8-20.
Online
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