HC1010 Accounting for Business Decisions Assignment, T2 2019, Holmes

This accounting assignment analyzes various aspects of business accounting, focusing on the decision-making process of Tim, who is considering purchasing a shop. The assignment explores different organizational forms, including sole proprietorships and partnerships, and their implications for capital requirements and business financing. It delves into the role of accounting information in making informed business decisions, highlighting the importance of financial position analysis, solvency, and liquidity. The assignment also discusses the skills required for managing a business, such as communication, accounting treatment knowledge, and financial management expertise. The solution provides insights into how Tim can finance his business operations and the essential skills needed to run the business successfully. It offers a comprehensive overview of accounting principles and their practical application in a real-world business scenario.

Running head: ACCOUNTING FOR BUSINESS
ACCOUNTING FOR BUSINESS
Name of the Student
Name of the University
Author Note

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ACCOUNTING FOR BUSINESS
Table of Contents
Introduction...................................................................................................................2
Answer to Question A...................................................................................................2
Answer to Question B...................................................................................................3
Answer to Question C...................................................................................................3
Answer to Question No D.............................................................................................3
Answer to Question No E.............................................................................................3
Conclusion....................................................................................................................4
Reference.....................................................................................................................5

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Introduction
Accounting helps the company to record all the transaction in its financial
statement. The report shows about the decision taken by Tim in regards to the
purchase of the shop. It shows the various option of form of organisation which are
available for Tim to choose and how it able to finance its business operation.
Answer to Question A
Tim has many options in regards to the form of the organisation. Tim can
select the form of organisation based on capital requirement and nature of the
business it wants to carry in the shop (Bebbington, Unerman and O’DWYER 2014).
The types of organisation Tim can choose from:
 Sole Proprietorship
 Partnership
Sole Proprietorship
A sole proprietorship also known as individual entrepreneurship or sole trader
is an enterprise that is owned and run by a single individual and in which the
individual and the business entity have no legal distinction (Brown 2014).
Advantages of Sole Proprietorship
 The setup and termination of the business entity are effortless.
 Sole Proprietorship is easy to control in comparison to another form of
business.
Dis-Advantage of Sole Proprietorship
 The main disadvantage is that it carries unlimited liability principle that
indicates the individual is personally liable for the debt in the business.
Partnership
The partnership is a business structure that involves several individuals who
jointly carry business operations (Duska, Duska and Kury 2018). The partnership
can classify as a general and limited partnership.
Advantage of Partnership
 More capital is available for the business
 More knowledge and expertise imposed in the business
Dis-Advantage of Partnership
 The liability of partners is unlimited in regards to the debt of the business
 Each partner serves as an agent of another partner and is liable for any action
taken by another partner.
Answer to Question B
Tim has to choose the form of organisation it wants to carry its business
activities. The amount of finance is directly related to the form of organisation
(Kaplan and Atkinson 2015). Sole proprietorship attracts less amount of investors in
the business. The partnership is jointly owned by many individuals that will also
increase the overall contribution of the capital in the business. Tim need less amount

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of investment for its business than it can go for sole proprietorship. Tim wants to get
more amount of finance than Tim can choose partnership form of organisation to
carry its business.
Answer to Question C
Tim is choosing the Sole Proprietorship as its form of organisation. Tim can
invest its investment in the company in form of capital in starting the business
operation (Kieso, Weygandt and Warfield 2019). Tim can raise more amount of fund
by taking Bank Loan which will help Tim to increase the overall capital of the
business. Tim has to fulfil the minimum requirement of bank loan and able to raise
the fund with the help of bank loan in the business (Libby 2017). Tim has to give
some collateral to the bank for securing any kind of default in payment of a business
loan. These include commercial or residential property, vehicles or any other
personal possessions. Tim has to show its current income, living expenses and
provide information for any current debt upon the company.
Answer to Question No D
Accounting Information is data in regards to business entity transaction.
These provides details of the events taken place in business. The accounting
information that will help Tim to decide related to the purchase of a business are:
1. It provides with a baseline of business financial position that will help Tim to
know about the future events that can take place in the organisation
(Schaltegger and Burritt 2017). It helps Tim to analysis the financial health of
the organisation that helps it to know the position of business in the market.
2. Accounting information helps Tim to know the solvency and liquidity in the
company business. These would give an idea about the investment which is
required to carry all the business activities properly in the organisation
3. Tim will also be able to know the resources which require in the business and
how the organisation can carry its operation with the help of scare resources.
Non- financial information that should be requested by Tim is how the company
manages the risk management in the business. The procedure they follow to
minimise or reduce the risk factor in the business. Tim should also ask for the
competitors who are there in the business as it will affect the overall profitability of
the business.
Answer to Question No E
The skills or accounting knowledge required to manage the business are:
1. Communication Skills – Tim must have proper communication skills which
will help it to carry the business operation easily (Smith 2017). Tim can be an
active listener which help it to know the problem its customers are facing and
this will help Tim to provide better solutions to the problems of customers.
2. Accounting Treatment – Tim should have proper knowledge of each
accounting transaction as this will help it to prepare proper accounting
statement of the business. Tim should know all the rules and regulation
related to the accounting treatment.
3. Financial Management – Tim should able to manage its business operation
properly. It should maintain a balance in both the own capital as well as
borrowed capital.

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Conclusion
On a final note, it concludes the option which Tim choose in regards to
organisation form. It shows how Tim can finance its business activities and what are
the skills required by Tim to run its business operations.

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Reference
Bebbington, J., Unerman, J. and O’DWYER, B.R.E.N.D.A.N., 2014. Introduction to
sustainability, accounting and accountability. Sustainability accounting and
accountability (pp. 21-32). Routledge.
Brown, R., 2014. A history of accounting and accountants. Routledge.
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. Wiley-Blackwell.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI
Learning.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2019. Intermediate accounting. John
Wiley & Sons.
Libby, R., 2017. Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting:
issues, concepts and practice. Routledge.
Smith, M., 2017. Research methods in accounting. Sage.