The sole proprietorship is the simplest form of business organization. A sole proprietorship is a business that is owned by an individual who is solely responsible for all aspects of the business. The owner is personally responsible for all debts of the business‚ even in excess of the amount invested. The business and its owner are thus considered the same entity. The advantages of a sole proprietorship include: a. Low start up costs‚ as legal and filing fees are at a minimum. However‚ many
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Preparation of financial statements for sole proprietorships Learning Objectives: Identifying the components of Financial Statements Identifying the objectives of Financial Statements Understanding the preparation of Financial Statements Adjustments needed in Financial Statements 1. Introduction Generally Financial Statements are prepared for any business annually. As per the Periodic concept the profits and losses of a business is computed for a period. In practice this period is a one year
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different between the formats of financial statements (income statement and balance sheet) for different types of business such as sole proprietorship‚ partnership and limited company Each company will have different economic sectors so they use different financial statements with different format that satisfy those sectors. The financial statements collect the financial records form the sales and purchases produce‚ the net taxable profit or loss for each month. Different types of business use different
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1. Sole Proprietorship Single proprietorship is the simplest form of organization in most of the countries in the world. Unlike other forms of entity‚ it is usually not governed by special laws. A proprietorship is a type of business entity which legally has no separate existence from its owner. Hence‚ the limitations of liability enjoyed by a corporation and limited liability partnerships do not apply to sole proprietors. All debts of the business are debts of the owner. The single proprietor has
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MUHAMMAD ALI Sole traders: According to Peterson and Plowman : “ As sole proprietorship is a business unit whose ownership and management are vested in one person. This individual assumes all risk of loss and failure of the enterprise and receives all profits from its successful operation”. A sole trader describes any business that is owned and controlled by one person‚ although they may employ workers‚ e.g. a newsagent’s shop. Individuals who provide a specialist service like hairdressers‚
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CORPORATION FORMATION DEFINITION An artificial being created by operation of law‚ having the right of succession and powers‚ attributes and properties expressly authorized by law or incident to its existence” (New Corporation Code) CHARACTERISTICS * separate legal entity – an artificial being with a personality separate from that of its individual owners * created by operation of law – mere agreement of the parties cannot give rise to a corporation * right of succession – continues
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of a Business Firm under Sole Proprietorship in the Philippines Starting a business in the Philippines requires series of procedures and steps‚ and there are different processes of registration depending on the form of business the entrepreneur ventures. This research report will talk about how to acquire the legal status of a business under the business form – sole proprietorship‚ discussing in detail the steps involved. As Lawrence Gitman defines sole proprietorship‚ it is a business that
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Limited Liability Corporation and Partnership In the United States‚ limited liability companies increased rapidly throughout the past 10 years. These structures permit businesses to decrease federal tax liabilities by federal pass-through provisions (Bean & Bilyeu‚ 1997). Limited liability can apply to any non-corporate business‚ in any state‚ and provides characteristics of a corporation and a partnership. Individual states regulate the operations of the LLCs. However‚ companies with limited
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LAW (PARTNERSHIP AND CORPORATION) GAMMAD‚ MARY JANE M. (Art. 1833-1836) ARTICLE 1833 Where the dissolution is caused bythe act‚ death or insolvency of partner‚ eachpartner is liable to his co-partners for his share of any liability created by any partner acting for thepartnership as if the partnership had not beendissolved unless: 1.)The dissolution being the act of anypartner‚ the partner acting for thepartnership had knowledge of thedissolution; or 2.)The dissolution being by the death orinsolvency
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CORPORATION VS PARTNERSHIP 1. Creation CORPORATION Created by operation of law; PARTNERSHIP Created by agreement of the parties; 2. Numbers of incorporators CORPORATION Requires at least 5 incorporators; PARTNERSHIP Requires at least 2 partners; 3. Commencement of juridical personality CORPORATION Acquires juridical personality from the date of issuance of the certificate of incorporation by the Securities and Exchange Commission ;PARTNERSHIP Acquires juridical personality form the
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