Different Types of Business Organizations and Users of Management Accounting

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
(A)Different type of business organizations and advantage for organizations...........................1
(b) Main users of management accounting use of accounting information................................2
PART 2............................................................................................................................................3
PART 3............................................................................................................................................4
PART 4............................................................................................................................................8
a) Income Statement of S Keyes for year ending 30th September 2019......................................8
b) Statement of Financial Position as at 30th September 2019....................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Accounting is the one of the vast field that support accounting a lot. In the current report
varied business structures are discussed in detail. Apart from this, varied users of financial
information are discussed in detail. In middle part of report journal and ledger are prepared. At
end of the report, conclusion section is prepared.
PART 1
(A)Different type of business organizations and advantage for organizations
There is different type of business organizations that are commonly known by the people.
These organizations are sole trader, partnership and company. In terms of characteristics and size
all these business organization are different from each other. All these firms have different merits
and demerits which are given below.
Sole proprietor
Sole proprietor refers to the business entities where an owner himself acts as workforce
or alone run a business. In case of some of sole trader there two or three employees that work
under the leadership of the business owner (Renz and Herman, 2016). Sole proprietor normally
operate business at small and medium scale. There are number of benefits and limitations of sole
trader and same are explained below.
Benefits
 Owner have full rights to make business decisions and he does not need to take
permission from any one to make business decisions. It is the full freedom of decision
making which in terms of advantage may sole trader business different from other.
 Sole trader businessman enjoys all gains made in the business and loss that business
faced during its tenure. For loss sole trader can not make responsible to anyone but in
case of profit there is no entity with which it need to be shared.
 Less number of rules and regulations need to be followed by the sole trader which make
it easy for it to run a business.
Partnership
Partnership refers to the business process under which multiple people join hands together
and run a business. In the partnership model ratio is determined and in that ratio all resources,
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gain and loss are shared by the partners in the business (Karadag, 2015). Advantage of
partnership are given below.
 Risk and loss in the business is shared between partners and it is the one of its major plus
point or advantage.
 Multiple people intellectual property comes at one place and in best manner and due to
this reason business is operate and managed in better way. This ultimately lead to
effective utilization of resources in the business.
Corporate
Corporate or company is the entity formed by single man but owned by number of people
because they purchase share in the company. Purchase of share means that other people buy
ownership in the company (Barr and McClellan, 2018). Advantage of the company is given
below.
In case business become insolvent then in that case business assets will be used to make payment
of debt amount. In such kind of case business owner personal asset will not be used to pay debt
amount.
Entire loss and profit is charged on company not business founders. Hence, it can be said that
liability is shares among individuals in the company.
(b) Main users of management accounting use of accounting information
Management accounting is the branch of accounting under which cost related data is saved
and analysed to compute cost of production and profitability of the business firm. By using this
tool to great extent cost factors are analysed and manager identify areas where lot of work need
to be done to control cost. Thus, it can be assumed that there is lot of significance of the
management accounting. Main users of the management accounting are explained below. Owner: It is the entity that operate and manage entire business and due to this reason, it
required business information in order to get business overview in terms of health and
profitability etc. On basis of results of financial statements manager decide that in which
area it need to work for business performance improvement. Shareholders: They are considered as real owner of the company as they hold stock in
the company or purchase a portion of the business. Due to this reason shareholders are
assumed as real owner of the company (Ogiela, 2015). One will have higher percentage
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