Long Term Sources of Finance for Unincorporated and Incorporated Businesses

Accounting for
business

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Unincorporated business(Sole traders and partnership firms)....................................................3
Incorporated business(Company)................................................................................................3
External long term sources of finance for both unincorporated business and incorporated
business.......................................................................................................................................4
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Accounting for business is the art of recording, classifying and summarising in a
significant manner and in terms of money, transactions and events. The function of accounting is
to provide quantitative information, primarily of finance nature, about economic entities, that is
needed to be useful in making economic decisions (Spilnyk and et.al, 2020). In this report,
includes the examination of the long term sources of finance for the unincorporated business and
incorporated business organisation.
TASK
Assets of finance for enterprise are equity, debt, debentures, retained income, term loans,
operating capital loans and letter of credit. These sources are used in the different conditions.
They are divided on the basis of time period, control and source of generation. On the basis of
sources of generation they are classified into the two parts such as long term sources of finance
and short term sources. Every source has different characteristics and classified according to the
business requirement. Long term sources of finance are used in the business to the long term
such as equity and debt whereas short term sources of finance are used in the business for the
short period such as working capital financing (Moss and Sandhu 2020).
Unincorporated business(Sole traders and partnership firms)
A commercial enterprises that does not have separate entity from its owner , it is known
as unincorporated business. It includes sole traders and partnership firms. They bear all the
responsibility of the business. If the business owner dies then transfer all the business to the other
person or close the business. They borrow the money to the business of different sources such as
friends, relatives and bank loan.
Incorporated business(Company)
The business that have separate legal form of its owner, it is known as incorporated
business. If the company suffers losses, it does not bear any looses of the company. The
company can borrow the money from different sources such as equity, debentures and venture
capital.