Financial Accounting Process: Partnership Business, Company Directors, ASX Companies

This article discusses the financial accounting process, including the advantages and disadvantages of partnership business, setting up small proprietary company, rights and responsibilities of company directors, funding options of the company, advantages and disadvantages of companies under ASX, company's funding option, and reporting necessities under ASX.

Running head: FINANCIAL ACCOUNTING PROCESS
Financial accounting process
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1FINANCIAL ACCOUNTING PROCESS
Table of Contents
Answer 1....................................................................................................................................2
a. Advantages and disadvantages of partnership business as against proprietary business2
b. Setting up small proprietary company............................................................................3
c. Rights and the obligations of the company directors......................................................3
Answer 2....................................................................................................................................4
a. Advantages and disadvantages of companies listed under ASX as compared to small
private companies...................................................................................................................4
b. Company’s funding option..............................................................................................4
c. Reporting requirements under ASX................................................................................4
Reference....................................................................................................................................6

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Partnership is widely known form of business, whereby two or more people come
together, share ownership, as well as the responsibility for managing the day to day affairs of
the business and the losses and profits, which is generated by the business. These individuals
are called the business partners. The business mainly classified into three different forms,
general, limited and joint venture. Contrarily, sole proprietorship, is the oldest form of
business, where one person is solely responsible for managing the daily affairs of the
business. Xiaojing and other partners would be able to take correct decisions by taking into
account the following items:
Part 1
a. Advantages and disadvantages of partnership business compared to sole
proprietorship:
Advantages:
 The legal formalities and requirements of partnership form of business is very less,
when compared to sole proprietorship.
 In the case of the death or injury of any partner, the others can step in and continue
the affairs of the business. This is not possible in the case of sole proprietorship, as
the death of the proprietor brings the end of the business (Asic.gov.au, 2018)
 One of the biggest advantages of partnership form of business remains the fact that
the risks are shared by the partners, but in case of sole proprietorship is not possible.
Disadvantages:
 There is the complete absence of conflict and confusion in the case of sole
proprietorship, as he or she is the sole decision maker, but tension, confusion and

3FINANCIAL ACCOUNTING PROCESS
conflicts exists in case of partnership form of business, because of the involvement of
the interests of many members.
 Unlike sole proprietorship, where the owner is fully entitled for receiving the profits
of the business, in partnership, the profits needs to be shared as per the partnership
agreement.
b. Setting up small proprietary company
In order to set up small proprietorship company the proprietor must initially apply for
the name of the business, tax registrations, registration of the business and the ABN
(Australian Business Number) (Setting up a business in Australia - Austrade, 2018). Along
with this, the following regulations must be followed:
 Selection of the business name from the available ones, emphasising its legal status.
 Formation of the rules and regulations of the company.
 Determination of the state or the territory, for the registration of the company.
 Carrying out the necessary paper work and other online formalities. (Sole trader,
2014)
c. Rights and the responsibilities of the company directors
Xiaojing and other partners is accountable for managing the matters of company.
They are also required to obey all the legal requirements as the director in accordance with
the Corporation Act 2001 and the rights are noted below:
 Authorised to obtain all the documents of the company.
 Authorised to scrutinise all the financial records of the company.
 Involvement in the decisions of the board.
 Right of implementing corporate constitution in the matters for the interest of the
company. (Asic.gov.au, 2018).

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Funding options of the company:
 In case of a public company, funds can be raised from issuing shares.
 In case of private ones, in case exceeding fifty members, then shares can be issued
and funding options from employee’s contribution is also available.
Part 2:
a. Advantages and disadvantages of companies under ASX compared to small
private companies
Advantages:
 The ASX companies are better equipped to raise capital from the market, because of
the backing of the Australian government.
 Funds of the shareholders from listed companies are considerable safe, as it is being
used by the backing of the Australian government in ASX
Disadvantages:
 The initial public offering is expensive for the companies under ASX.
 Shares of the ASX companies are more vulnerable to changes in prices and liquidity
risks, as they are beyond company’s control. (Asx.com.au, 2018)
b. Company’s funding option
 Overdrafts and bank loans are some debt finance options.
 Finance from issuing securities and shares, friends and others and venture capitalists
are also available.
c. Reporting necessities under ASX
 Annual and semi-annual releases of financial reports and statements.

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 Audit of all the financial reports and statements of the company. (Asx.com.au, 2018)
 It is mandatory for all the companies to report to the ASX (Australian Securities
Exchange), ATO (Australian Taxation Office) and ASIC (Australian Securities and
Investment Commission).

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References:
Raising funds in Australia | ASIC - Australian Securities and Investments Commission.
(2018). Retrieved from https://asic.gov.au/regulatory-resources/fundraising/raising-
funds-in-australia/
Setting up a business in Australia - Austrade. (2018). Retrieved from
https://www.austrade.gov.au/International/Invest/Guide-to-investing/Setting-up-a-
business
Small business-knowing your legal requirements-companies | ASIC - Australian Securities
and Investments Commission. (2018). Retrieved from https://asic.gov.au/for-
business/your-business/small-business/compliance-for-small-business/small-business-
knowing-your-legal-requirements-companies/
Sole trader. (2014). Retrieved from https://www.business.gov.au/info/plan-and-start/start-
your-business/business-structure/business-structures-and-types/sole-trader
Starting your own business. (2018). Retrieved from
https://www.ato.gov.au/Business/Starting-your-own-business/