Test bank and solution of accounting 9th (2)

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Test bank and solution of accounting 9th (2)

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2)iley & Sons Australia, Ltd 2015Chapter 2: Financial statements for decision makingCHAPTER 2 FINANCIAL STATEMENTS FOR DECISION MAKINGDISCUSSION QUESTIO

NSI SOLUTIONS1Explain the basic differences between a sole trader (or single proprietorship), a partnership and a company. Discuss the factors that ne Test bank and solution of accounting 9th (2)

ed to be considered tn selecting an appropriate structure for Cynthia's beauty services business.The three basic business structures arc:Sole traders

Test bank and solution of accounting 9th (2)

are where individuals conduct business iu thcữ own capacity. They would be contributing thcữ own capital or equity to the business and would be borrow

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2)the bank, would have access to their own personal assets to repay the outstanding debt. This business structure is suitable for small operations with

small staff and turnover. The sole trader has sole responsibility and control for the business operations and activities. I his structure is suitable Test bank and solution of accounting 9th (2)

for small businesses which require minimal capital to set up and have relatively low running costs and risk.A parlnersliip is two or more persons in b

Test bank and solution of accounting 9th (2)

usiness together, operating under a partnership agreement which may or may not be a formally written document. Partnerships have the advantage over so

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2)iness. The partnership is treated as a separate entity for accounting purposes but is not a separate legal entity. This means that the underlying asse

ts and liabilities of a partnership belong to the individual partners in the proportion agreed upon as part of the partnership agreement. Therefore if Test bank and solution of accounting 9th (2)

the business activities prove to be unsuccessful, creditors have the right to access the personal assets of the individual partners in the event the

Test bank and solution of accounting 9th (2)

business is unable to repay any outstanding debt, l or this reason, the partnership structure is usually used where there is a low element of risk to

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2)rofessionals including accountants and lawyers.The company is a separate legal entity with ownership of a company attributed to shares held. The owner

s of the company arc known as shareholders. The advantage of this business structure is that, as a separate legal entity, the assets and liabilities b Test bank and solution of accounting 9th (2)

elong to the company. In the event the business is unable to repay its debt, the creditors only have access to company assets for repayment of the deb

Test bank and solution of accounting 9th (2)

t. The investment in the company by its shareholders is limited only to the shareholders* capital contribution, i.e. what the shareholder pays for the

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2)ployees and has a higher business risk. The disadvantages include higher set up and ongoing costs and possible reduction in control over the business

operations where shareholders are not directly involved in the business operations.© John Wiley & Sons Australia, Ltd 20152.1Solutions .Manual to acco Test bank and solution of accounting 9th (2)

mpany Accounting 9e by Hoggerr er alFactors (hat Cynthia needs 10 consider in selecting an appropriate structure for her business include:•simplicity

Test bank and solution of accounting 9th (2)

in selling up the businessSole traders and small partnerships are easier to set up compared to companies.•establishment costsCompanies arc more expens

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi

Test bank and solution of accounting 9th (2) and partners arc personally hable for their business’ debts, including those resulting from lawsuits or the actions of other partners. If unlimited l

iability is a concern, then Cynthia may want to consider setting up a company instead of being a sole trader or partnership.•taxTax reporting requirem Test bank and solution of accounting 9th (2)

ents for companies arc far greater than for sole traders and partnerships.•control of the businessAs an owner of a sole trader. Cynthia would have a c

Test bank and solution of accounting 9th (2)

omplete control over her business.

Solutions Manualto accompanyAccounting 9ebyJohn HoggettLew EdwardsJohn MedlinKeryn ChalmersAndreas HellmannClaire BeattieJodie MaxfieldWileyCO John Wi