Types of Business Organisation and Main Users of Accounting Information

REPORT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
a. Types of business organisation and advantages of using profit business structures................1
b. Main users of accounting informations and use of information by the users..........................2
PART 2............................................................................................................................................3
PART 3............................................................................................................................................4
PART 4............................................................................................................................................7
a) Income Statement of S Keyes for year ending 30th September 2019.....................................7
b) Statement of Financial Position as at 30th September 2019. .................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
In present times there are different organisations existing that are using profit based
business structures. Report will reveal bout different types of organisation with their advantages.
It will provide who are the main users of accounting information and and the use of accounting
information by these users. It will give an understanding about recording of transactions in books
from journals to ledgers and preparation of trial balance by numeric solution of the questions.
PART 1
a. Types of business organisation and advantages of using profit business structures.
Types of business organisations
Sole Proprietorship
Business is owned by single individual and is most common and simple form in
businesses. This business is run for making benefit to the self. Existence of business is
completely dependent on decision of the owner. Business comes to end when there are no
nominees to continue the business. In Sole proprietorship owner have the unlimited liabilities
and is personally responsible for all liabilities.
Advantages
 Owner is not under obligation to decide for place and here activities related to business.
 Proprietor is sole person who receives all profits that are generated in the business and
does not have share to with others as there is no legal obligation (Petty and Mandel,
2015).
 Business do not have to follow various regulatory requirements and there are not much
requirements for establishing business.
Partnership
In this type of business ownership is shared by two or more partners who make
contribution of resources in enterprise. Partnership is divided into 2 parts i.e. limited and general.
In general ones owners collectively invest their funds in business. All partners investing their
funds are having unlimited liabilities for debts of business. Even a small contribution will make
the partner liable to all the debts of business. Formal agreements are not required in general
partnership and could be implied between business owners. Where in limited liability formal
agreements are must between partners. Certificate of partnership is required to be filed with
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respective states. This partnership allows partners for limiting own liability for debts of business
on basis of their investment and ownership (Spence and Hyams-Ssekasi, 2015).
Advantages
 Business gets more capital as resources are shared by partners. Resource availability is
increased due to partnership.
 Profits are shared by all the partners of enterprise and also the liability is shared between
partners of the enterprise. Liability can be limited up to the amount of their contributions
in business.
 Partnership is easy to establish and is flexible form of business.
Corporation
Corporation refers to business organisation that is having distinct legal personality from
its owners. Corporation is having a separate standing from its owners and held personally liable
for all its owners. All the transactions are incurred in the name of company and not in name of
owners. It can open bank account, receive loans and can sue or be sued in its own name separate
from its owners. Profits which are generated by corporations are assessed and taxed under
personal income of company (Steingard and Gilbert, 2016). But establishing a corporation is
costly and complex process with many legal requirements.
Advantages
 Owners of the company limit their liability is limited to debts and losses. Personal assets
of owners are not seized for business debts.
 All the profits & losses incurred belong to corporation only.
 Ownership can be transferred from one person to another easily.
b. Main users of accounting informations and use of information by the users.
Objective behind accounting information are correlated to requirements of decision-
making by the users of financial informations. Needs of users define the factors that are to be
taken into considerations while designing accounting information system. Users require
accounting information for facilitating process of decision-making, this is serving as platform for
framing guidelines for ensuring uniformity, accuracy and relevance of accounting informations
& procedures over different organisations (Schroeder, Clark and Cathey, 2019).
Owners
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