Financial Accounting: Sole Proprietorship, Partnership, Company

This report compares the financial accounting practices of sole proprietorships, partnerships, and companies. Sole proprietorships, as single-owner businesses, have simpler financial statements, primarily focusing on profit and loss and balance sheets to track revenue, expenditure, and tax liabilities. Partnerships, involving two or more individuals, use similar financial statement structures to limited liability companies, with differences mainly in owner's equity entries. Companies, as legal entities, prepare comprehensive financial statements, including profit and loss statements, balance sheets, and cash flow statements. Publicly listed companies must publish their financial statements annually, providing insights into their financial performance. This report highlights the differences in financial reporting based on the business structure and the purpose of the financial statements.

Running Head: FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Name of the Student
Name of the University
Author Note

1FINANCIAL ACCOUNTING
Table of Contents
Financial Statements..................................................................................................................2
Reference....................................................................................................................................3

2FINANCIAL ACCOUNTING
Financial Statements
The sole proprietorship is considered to be simplest form of the business, under which
business is operated by single person. It is not legal entity. The sole proprietorship does not
have to file the accounts with public body. However, profit & loss account and balance sheet
can be prepared by them each year. The balance sheet includes only one capital accounts that
belongs to single owner. The financial statements prepared by sole proprietorship helps them
to keep track of their revenue and expenditure and it provides basis for income tax liabilities
(Syal, 2015).
The partnership is formal arrangement by the two or more than two parties for
operating and managing business and share the profits generated by firm. The preparation of
financial statement for the partnership is in same way as that of the limited liability
companies. The structure of balance sheet and income statement are similar as that of
company. However, the only difference is in the entries of owner’s equity. Further, the
company is legal entity that is formed by group of the individuals for engaging in and
operating the industrial or commercial enterprise business. The preparation of financial
statements by the company includes statement of profit and loss, statement of comprehensive
income, balance sheet and statement of cash flow. Moreover, listed company is required to
publish their financial statements at the end of financial year. This helps the company to
know about their financial statement at the end of year (Darmansyah, 2018).

3FINANCIAL ACCOUNTING
Reference
Darmansyah, A. (2018). Comparative Analysis of Bookkeeping at Sole Proprietorship and
Partnership Small and Medium Enterprises: Study on Culinary Sector in Greenville,
Jakarta.
Syal, A. W. H. (2015). A guide to business structures in Afghanistan: sole proprietorship,
partnership, limited liability corporation, and corporation/authors Abdul Waris Hakim
Syal, Samira Abrar, Mohammad Arif Noorzai.