Business Enterprise Types and Long-Term Finance for Listed Firms

This report provides an overview of different business enterprise types, including sole traders, partnerships, and companies, highlighting their characteristics and benefits. It also delves into the long-term sources of finance for listed companies, focusing on the differences between share capital (common stock and preferred stock) and long-term debt (bonds and long-term leases). The report emphasizes the importance of understanding these financial instruments for making strategic decisions and achieving financial stability. Desklib offers a range of resources, including past papers and solved assignments, to further assist students in their understanding of business and finance topics.

TYPES OF BUSINESS
ENTERPRISE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Explaining that three different types of business enterprise by using illustration......................1
Explaining difference between two forms share capital and long term debt in the context of
long term sources of finance of listed companies.......................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Business accounting helps the organization to get ability to record, analyze and interpret
information in systematic form so that data regarding financial transaction can be derived. In the
current era, there is requirement to have effective application of business accounting so that
proper decision can be formulated. The current report will pay attention on explaining reason for
existence of three different types of business enterprises along with examples. It ill critically
distinct between two forms share capital &two forms of long term debt in context of long term
sources of finance sources of finance of listed public limited company.
MAIN BODY
Explaining that three different types of business enterprise by using illustration
There are different kinds of business which can be operated for the purpose of having distinct
form of benefits (Appelbaum and et.al., 2017.). Each type of enterprise has its own benefits &
drawback which are required to be taken into consideration for having depth insights. The
different types of business are as follows:
Sole traders
It is one of the type of business which is associated with paying attention on managing
& controlling business practices. It allows to the sole trader to take decision without any
interference. He is considered to be responsible for sharing profits & losses and as well offers
simplicity, versatility and number of other advantages (Gupta and Radhaswamy, 2021). From
the evaluation it can be articulated that individual through choosing this particular kind of
enterprise can derived significant advantages so that accomplishing objective can become
possible. For instance- person operating as sole trader can become able to organize., direct,
analyze and control operational activities so that higher profit margin can be derived.
Partnership
It is related with operating business with help of two or more partners in turn
accomplishing objectives through deriving help can become possible. With help of this kind of
enterprise it can be articulated that person for deriving different form of merit take decision to
operate as partnership (What Is a Business Partnership? 2021). It allows bridging gap between
expertise & knowledge, more availability of capital, higher ability to grab opportunities, moral
support, tax benefits, new perspectives, etc. From the evaluation it can be identified that to
obtain these benefits there is existence of partnership type of enterprise.
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Company
It is widely taken int consideration for having separate entity identity from the owner. It
allows achieving different merits which helps to achieve higher competitiveness in turn meeting
overall objectives of conducting operational practices can successfully attained. The existence of
this particular form of enterprise is to avail pros like limited liability, perceptual, professional
management, expansion potential, transfer of shares and ability to mitigate the risk
(Maheshwari, Maheshwari, and Maheshwari, 2021). On the basis of this it can be specified that
for this purpose company form of enterprise exists. For instance- shareholders of a company has
limited liability to the extent capital invested by them which declines the burden of insolvency.
On the basis of this, it can be found that companies can effectively function.
Explaining difference between two forms share capital and long term debt in the context of long
term sources of finance of listed companies
There are number of options available for the companies to finance its business in turn higher
ability to coordinate with changing circumstances can become possible. In order to formulate the
capital structure company largely formed by companies through having suitable contribution of
equity & debt. It is highly dependent on the suitability of the enterprise that which option is
chosen by it.
Two forms of the share capital comprises common stock and preferred. Both the forms
of share capital are distinct from each other and provides different benefits & limitation. To have
effective capital structure by the listed company, there must be proper evaluation of its impact
on the progress (Rikhardsson and Yigitbasioglu, 2018)). Equity share capital is raised by
offering shares in which investors are offered dividend after paying to the preference share
holders (Types of Share Capital, 2021). The one of the significant benefit that can be achieved
by listed company through having equity share capital as compared to preference is that rate of
dividend is not fixed and only paid when there is enough availability of liquidity. The equity
shares capital has exercise of control in processing of business which is not obtained by the
preference share capital.
There two forms of long term debt in the context of long term source of finance can be distinct
through highlighting their nature of payment which involves installment paying and overcoming
overall obligation. The listed company in order to be successful require sufficient amount of
fund in order to success. It can use bond & long term lease which are useful in obtaining funds
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for the longer duration. Bonds are highly taken into practice for having long term benefits like
having tax exemption, no interference, less risky, etc. on the other side, leasing for long term can
be highly beneficial for the listed companies in turn better processing through paying attention
on obtaining that using asset with having less capital, advanced availability of equipment, etc
can be derived through applying it (Bukowski and Novokmet, 2021). On the basis of this, it can
be specified that debt for long term can allow the listed company to achieve such benefits in turn
accomplishing predetermined objectives can become possible.
From the analysis of the conducted comparison it can be said that having each type of share
capital and debt source of finance by listed company for the longer duration can provide diverse
range of competitiveness (Wang, 2021). The listed company can have sufficient stability in
terms of financial resources through properly evaluating its suitability, urgency, level of
interference, ability to overcome timely obligations, etc. on the basis of this, it can be articulated
that both mentioned options are different from each other.
CONCLUSION
From the above report it can be concluded that accounting for business is crucial for
having sufficient understanding for having strategic decision. The current report has involved
different kinds of business such as sole traders, partnership and company. The present report has
comprised difference between two forms of share capital & long term debt in the context of long
term for finance of listed companies.
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REFERENCES
Books and Journals
Appelbaum, D and et.al., 2017. Impact of business analytics and enterprise systems on
managerial accounting. International Journal of Accounting Information Systems. 25.
pp.29-44.
Bukowski, P. and Novokmet, F., 2021. Between communism and capitalism: long-term
inequality in Poland, 1892–2015. Journal of Economic Growth. pp.1-53.
Gupta, R. L. and Radhaswamy, M., 2021. Corporate Accounting. Sultan Chand & Sons.
Maheshwari, S. N., Maheshwari, S .K. and Maheshwari, M. S. K., 2021. Principles of
Management Accounting. Sultan Chand & Sons.
Rikhardsson, P. and Yigitbasioglu, O., 2018. Business intelligence & analytics in management
accounting research: Status and future focus. International Journal of Accounting
Information Systems. 29. pp.37-58.
Wang, T., 2021. The impact of emerging technologies on accounting curriculum and the
accounting profession. Pacific Accounting Review.
Online
Types of Share Capital. 2021. [Online]. Available through: <https://groww.in/p/types-of-share-
capital/>.
What Is a Business Partnership? 2021. [Online]. Available through:
<https://www.thebalancesmb.com/what-is-a-business-partnership-398402>
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