Financial Accounting

Topics: Balance sheet, Corporation, Types of business entity Pages: 11 (2707 words) Published: March 10, 2013
anciSEGi University

BBM – Financial Accounting (FIN 2241)


No.| Title| Pages|
1| Executive summary| 2|
2| Question 1 | Introduction| 3|
| | Sole Proprietorship| 4|
| | Partnership| 5|
| | Limited Liabilities Company| 6|
| | Accounting| 7|
| | Benefits of accounting| 7-9|
3| Question 2| Differences of income statement and balance sheets| 10| | | Tabulation of income statement and balance sheets| 11| | | Use in decision making| 11|
| | Five users and differentiation of the information needs| 12| 4| References| 13-14|
5| Bibliography| 15|

Executive Summary

The introduction to a business consists few steps that should be taken. Regarding to Mr Peter who was once an engineer, he wants to open up a new business after his retirement. Therefore, he needs to know what kind of business industry he would look like to do. Since he is an engineer, an electronic service is suggested. The next step is would be setting up a business entity. He needs to know that they are three type of it which is Sole Proprietorship, Partnership and Limited Liability Company. In each of the business entity has their own characteristics, advantages and disadvantages need to be considering before choose any of it. Furthermore, Mr Peter also needs to know what is accounting. It is a very important aspect in a business to know the company’s profit or loss. It is also helps the business to generate cash flow for the company. In the other hand, in the accounting it selves have income statement and balance sheets that can guide the business. Both of the financial statements have their own differences. Even each of the use is different for every user that need of them.

Question 1

To: Mr Peter
From: Sharifuddin Haziq Bin Abdul Aziz
Date:28th February 2013
Subject:How to Start a Business

Dear, Mr Peter,
Regarding to the letter that I have received last week, it informs me that you, Mr Peter, wanted to open up a new business. Therefore, you have come to me for advice regarding about it. Plus, you need to know more about on how to keep records on the transactions and which form of business you need to set up with. Firstly, you need to know what kind of business industry you want to do. For example, food and beverages, automotive or entertainment and leisure. Based on your past jobs, you were an engineer in a big company which mean you are good with electronic therefore I recommended that electronic service business for you is the best. Next, the basic thing is to set up business entities. Business entities mean commercial, corporate and/or other institution that is formed and administered as per commercial law in order to engage in business activities, usually the sale of a product or a service. Many types of business entities include corporations, cooperatives, partnerships, sole traders, Limited Liability Company and other specifically labelled types of entities. The basic of setting up a business entity in Malaysia is not so difficult to understand. First of all, let me explain you about the types of business entities that Malaysia has, there are three types to choose from:

A. Sole Proprietorship

It is also known as sole trader. This type of entity is the owner owned and run by them without any legal distinction between the owner and the business. The Sole Proprietorship business entity in Malaysia is owned solely by one individual who is unlimited. Unlimited liability means that all the profits received after the taxation specific to the business is and all the losses and debts are fully responsibility of the owner. Every asset and debts are all own by the proprietor their self.

Other name| Sole trader|
Ownership| One...
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