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Chapter 1: Q. 7RQ (page 32)

Describe the similarities and differences among the four different types of business entities discussed in the chapter.

Short Answer

Expert verified

Sole proprietorhip has only one owner, there are two or more owners in partnerships, and in the case of corporation and LLC鈥攖here is one or more owners.

Coprpoerartion and LLC has indefinite life, sole propreietorship terminates at owners鈥� willor death. Also, in case of partnership, it can be terminated at choice of partner or death.

Step by step solution

01

Types of Business Organizations

The different types of business organizations are Sole proprietorship, Partnership, Corporation and Limited-Liability Company (LLC).

02

Similarities and Difference

The similarities and difference between the different type of organizations are as follows:

Basis

Sole Proprietorship

Partnership

Corporation

LLC

Definition

In this businesss there is single owner.

In this business there are two or more owners, and are not considered as corporation.

It is recognized under the sate law, and treated as separate legal entity.

In this business, member is only liable for own actions.

Number of Owners

Single owner.

Two or more partners.

One or more stockholders.

One or more partners.

Life of Business

Terminates by owner鈥檚 choice or at death.

Terminates by partner鈥檚 choice or at death.

Indefinite.

Indefinite.

Personal liability of owners

Personal liability of owner.

Personal liability of partners.

No personal liability of stockholders.

No personal liability of partners.

Taxation

Not separate taxable entities.

It is not taxed. Partners pays tax on their income.

Separate taxable entity.

It is not taxed. Partners pays tax on their income..

Type of business

Small businesses.

Professional organization of accountants, attorneys, etc.

Small to large multinational businesses.

Partnership alternative.

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Most popular questions from this chapter

Centerpiece Arrangements has just completed operations for the year ended December 31, 2018. This is the third year of operations for the company. The following data have been assembled for the business: Insurance Expense \( 4,500 Salaries Expense \) 46,000 Service Revenue 70,000 Accounts Payable 17,600 Utilities Expense 1,400 Office Supplies 1,700 Rent Expense 16,000 Dividends 4,800 Common Stock 9,000 Accounts Receivable 8,000 Cash 7,200 Equipment 12,100 Retained Earnings, January 1, 2018 5,100

Preparing the balance sheet

Prepare the balance sheet of Centerpiece Arrangements as of December 31, 2018.

Identifying accounts Consider the following accounts: a. Accounts Payable b. Cash c. Common Stock d. Accounts Receivable e. Rent Expense f. Service Revenue g. Office Supplies h. Dividends i. Land j. Salaries Expense Identify each account as Asset, Liability, or Equity

Presented here are the accounts of Pembroke Bookkeeping Company for the year ended December 31, 2018: Land \( 10,000 Common Stock \) 29,000 Notes Payable 31,000 Accounts Payable 7,000 Property Tax Expense 3,100 Accounts Receivable 1,200 Dividends 28,000 Advertising Expense 12,000 Rent Expense 7,000 Building 147,400 Salaries Expense 64,000 Cash 2,800 Salaries Payable 800 Equipment 15,000 Service Revenue 192,000 Insurance Expense 1,700 Office Supplies 12,000 Interest Expense 6,600 Retained Earnings, Dec. 31, 2017 51,000 Requirements 1. Prepare Pembroke Bookkeeping Company鈥檚 income statement. 2. Prepare the statement of retained earnings. 3. Prepare the balance sheet.

Conner Thomas started a new business, Thomas Gymnastics, and completed the following transactions during December: Dec. 1 Received \(19,000 cash from Conner in exchange for common stock. 2 Received \)3,800 cash from customers for services performed. 5 Paid \(200 cash for office supplies. 9 Performed services for a customer and billed the customer for services rendered, \)4,500. 10 Received \(200 invoice for utilities due in two weeks. 15 Paid for advertising in the local paper, \)250. 20 Paid utility invoice received on December 10. 25 Collected cash in full from customer billed on December 9. 28 Paid rent for the month, \(1,600. 28 Paid \)1,450 to assistant for wages. 30 Received \(1,400 cash from customers for services performed. 31 Cash dividends of \)3,500 were paid to stockholders. Analyze the effects of the transactions on the accounting equation of Thomas Gymnastics using a format similar to Exhibit 1-6.

Match each example with a component of a computerized accounting information system. Components may be used more than once.

ExampleComponent
1. Server
a. Source documents and input devices
2. Bank checksb. Processing and storage
3. Reportsc. Outputs
4. Keyboard
5. Software
6. Financial statement
7. Bar code scanner
See all solutions

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