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Financial Accounting and Reporting Assignment - Next Plc

   

Added on  2020-10-05

12 Pages2352 Words300 Views
Financial Accounting andReporting

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1I. Evaluating limited liability company and its merits & demerits.............................................1II) Analysis and interpretation of annual reports of NEXT PLC................................................3CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONFinancial accounting and reporting is a concept of developing financial accounts in orderto ascertain performance of a business organisation. Main aim of this project report is to build anunderstanding about limited liability company and its financial reporting system. Scope of thisproject report includes merits and demerits of limited liability company in order to compare itfrom sole proprietorship and partnership. In order to better understand this concept annualreports of NEXT Plc is analysed and interpreted which operates in clothing, footwear andutility products. Technique of ratio analysis is used to analysis (Adams, 2015). MAIN BODYI. Evaluating limited liability company and its merits & demeritsLimited liability company is a corporate structure which allows its members to have alimited liability to the extend of their share in the company. It is considered that under thisstructure members are not personally liable for company's debts. This kind of company is knownas hybrid structure as it involves features of both a company and a sole proprietorship. LLC alsohas few taxation features of partnership. There are various advantages and limitations of thisstructure which are mentioned below in order to compare LLC with sole proprietorship andpartnership:Difference between LLC and sole proprietorship:LLCSole proprietorshipMeritsMembers of LLC has limitedliability to the extend of theirshare in company's capital.LLC can enjoy all theprivileges of being a companyand sole proprietorship(Edwards, 2013). Owner of sole proprietorshiphas unlimited liability andeven their personal assetscan be used to pay off firm'sliability. This type of corporatestructure only has rights ofsole proprietorship.DemeritsBeing a company, LLC has topay maintenance fees and highregistration fee. Sole proprietorship does nothave any liability to getregistered or pay any fees1

There are several regulationswhich has to be fulfilled by thecompany. This type ofstructure is subject to statelaws governing. regarding maintenance andregistration. Despite of business laws,there are no additionalregulations applied on soleproprietorship. Difference between LLC and partnership:LLCPartnershipMeritsThis type of structure enablesmembers of LLC to separatetheir personal assets fromcompany's assets. They have alimited liability to the extendof their share in company'scapital. Due to separate entity ofmembers and the company,existence of LLC does noteffect with its members. Deathor insolvency of membersdoes nit influence firm'sexistence. Members of a partnershipfirm are referred as partnerswhich has unlimited liabilityfor firm's debts andliabilities. Partnership firm can dissolvewith death or insolvency ofits partners. DemeritsThere are various regulationswhich are required to befulfilled by the promoter oflimited liability company.Registration of this type ofcompany requires a lot ofresources and funds. Formation and structure oflimited liability company isPartnership firm can beformed when two or moreindividuals decide to do abusiness together. Partnersof this type of structure doesnot have to fulfil any legalrequirements (Hoyle,Schaefer and Doupnik,2015). 2

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