Finance- portfolio

FINANCE PORTFOLIO

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
A) Different types of business organisations with their advantages and disadvantages..............1
B) Main users of accounting information and its importance to different users.........................5
PART 2............................................................................................................................................7
Journal Entries.............................................................................................................................7
PART 3............................................................................................................................................9
A) Journals ..................................................................................................................................9
B) ledgers and Trial Balance......................................................................................................10
PART 4..........................................................................................................................................12
a) Income Statement of S Keyes for year ending 30th September 2019...................................12
b) Statement of Financial Position as at 30th September 2019. ...............................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The business operates at multiples levels. In the diversified market there are different
forms of business organisation that could be established depending on the needs and
requirements. There are different advantages and disadvantages associated with every types of
organisation. The forms of business organisation are sole trader, partnership and corporations.
These organisations are established complying with separated legal requirements. These
organisations have to prepare accounting records as per the applicable framework. Financial
statements are necessary for organisations to be prepared as they help the executives of the
business to review their performance. It helps them to make changes in their policies and
procedures for increasing the efficiency of business (Aljuwaiber, 2016). The type of business
organisation that is adopted will be influencing multiple factors that will decide about future of
company. There are several factors like tax liability, legal liability, establishment cost and the
operational costs that vary with the type of organisation. The report will cover give
understanding about different types of business organisations that can be established. It will also
reveal about the importance of financial information to users.
PART 1
A) Different types of business organisations with their advantages and disadvantages.
As an business owner first decision is about the structure of business organisation. Before
making any decision one should know about the advantages and disadvantages of every kind of
business. Legal configurations should be adopted by the business defining the right and
obligation related to the participants in control, ownership, legal liability, personal liability and
lifespan. Business types determines the income tax return to be filed and liabilities of owner and
company. When forming business following factors should be accounted for like nature and size
of business organisations , control level in organisation, structure, vulnerability of legal lawsuits,
tax implications and profit or loss (Dash, Satpathy and Dash, 2018). Types of business
organisation that are mostly incorporated are :
Sole Proprietorship
This is the mostly accepted business type. Business of sole proprietor is owned by single
owner. Business of sole proprietor is usually established for the benefit of the owner. It is
established by single person for becoming the sole owner of firm. Existence of business is
entirely dependent upon decisions taken by the owner. The sole right of taking decisions rests
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with the owner of business. Sole proprietor have the responsibility of running business on day to
day basis. There are large number of sole proprietary firms but in aggregate are accounting for
very small business receipts (Johanson and Vakkuri, 2017). Example of sole proprietors are
freelancers, independent contractors or photographers.
Advantages
 Sole proprietor business is easy to form. Establishment of business is very simple like
printing business cards. Also the dissolution of business is an easy process it does not
involve lengthy legal requirements. It is least expensive business form that can be
established.
 In this type of business start up costs are very low and also the operational cost are low as
they generally operate on small scale.
 This type of business organisation do not have to follow and comply with major legal
requirements and regulations.
 Owner of the business receives all the profits. They are not required to share the profits
with others.
 Owners have the complete control over the company and have the sole authority of taking
decisions. They are not required to corporate income tax return. Income realized by the business of
sole proprietor are declared on the income tax return of the individual.
Disadvantages
 Owner of the business has an unlimited liability. They are all liable personally for all the
business obligations inclusive of employee's action related to business functions.
 Sole proprietary firms have limited life, business generally dies with the death of owner.
 Raising funds for the business is difficult task, only limited loans can be raised.
 A sole proprietary firm has no separate legal status.
Partnership
In a partnership business ownership is shared between more than two individuals.
Partnerships can be small as well big like accounting firms having dozens of business partners.
The partnership firm like sole proprietor is not differentiated from it owners. Partnership are
established on agreements between the partners. These agreements could be oral or written.
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