Different types of business organizations and advantages of business structure

FINANCE

TABLE OF CONTENTS
Part 1................................................................................................................................................1
Different types of business organizations and advantages of business structure........................1
Users of accounting information.................................................................................................1
PART 2............................................................................................................................................2
PART 3............................................................................................................................................3
Transaction in books of S.Keyes & Co. as on 30 June 2019......................................................3
PART 4............................................................................................................................................7
a) Income Statement of S Keyes for year ending 30th September 2019......................................7
b) Statement of Financial Position as at 30th September 2019....................................................7
REFERENCES................................................................................................................................9

Part 1
Different types of business organizations and advantages of business structure
There are different sort of organizations namely sole proprietorship, partnership and
corporation. Advantages of these firms in respect to business structure are given below. Sole proprietorship: Sole proprietorship refers to the business that is operated by any
specific individual (Burns and Dewhurst, J. eds., 2016). In such kind of business either
there is owner himself who manage the business or there are two more individuals that
assist one in running business. Advantage and disadvantage of sole proprietorship are
given below.
Advantage
 Entire profit is earned by the owner of business and he does not need to share it with any
other person. However, negative point is that one has to bear entire business risk with
limited available resources.
 Business firm does not need to follow many rules and regulations because business is
carried out at small scale. Partnership: It is type of business under which multiple people together work and
invested in specific proportion in the business. Thus, resources are shared by the
investors. Advantage of partnership are given below.
 Main benefit of partnership is that risk is shared among partners. In partnership business
in agreed ratio all investors share profit and loss as well as resources in the business.
 It is flexible part of the business (Hartmann, and et.al., 2016).
 Corporation: It is large corporate where multiple people are owner of the company.
Advantage is given below.
 Ownership can be transferred.
 Profit and loss earned and loss by firm not by any individual.
Users of accounting information Owner: Owner need IS and BS to make expense control and business expansion related
decisions.
1

 Supplier: They need BS and IS to identify whether firm will be able to pay them debt
amount on time (Users of financial statements., 2018). Lender: They need both statements in order to decide whether to pay debt to the business
firm.
PART 2
Journal Entries for recording the transactions in books of S. Keyes & Co.
Journal Entries
Date Particulars Debit Credit
01/06/19 Van 2696
To Pressed Garages 2696
( Being van purchased on credit
from Pressed Garages)
03/06/19 Bad Debts 50
To K. Patel 50
(Being bed debt written off for due
from K.Patel)
08/06/19 Past Time ltd 400
To Office Fixtures 400
(Being office fixtures returned to
Past Time Ltd)
12/06/19 Bank 100
Bad Debts 60
To Q Hanson 160
(Being settlement of Q Hanson a/c)
14/06/19 Drawings 100
To Inventory 100
(Being goods drawn by owner)
28/06/19 Capital a/c 50
To Insurance 50
(Being insurance debited for
2