Beruflich Dokumente
Kultur Dokumente
LESSON 4:
FORMS OF BUSINESS
ORGANIZATION
Learning Outcomes:
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Partnership
• Governed by the provisions of the Civil Code,
articles 1767 to 1867.
• Defined as and association of two or more persons
who bind themselves to contribute money,
property, or industry to a common fund with the
intention of dividing the profits among themselves.
• Easily dissolve by mere disagreement among the
partners, or in case like, withdrawal of a partners,
retirement, or death of any partners.
• Grounded on common trust, and confidence, thus
if the original relationships of the partner is
changed, the partnership is dissolved.
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Corporation
• The corporation is an entity held by five or more
individuals whose ownership is evidenced by shares of
stocks.
• Enjoys the benefit of accumulating big amount of
capital contributed by millions of owners called
stockholders.
• Difficult to organize as compared with the other with the
other two types of organizations.
• Corporations require compliance with different
government requirements such as registration to the
Securities and Exchange Commission, National Internal
Revenue, and oftentimes to the Bangko Sentral ng
Pilipinas.
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“ Section 2 of the Corporation
Code defines corporation as an
artificial being created by the
operation of la w having the rights
of succession and the powers,
attributes and properties expressly
authorized by law or incident to its
existence (BP no. 68, section 2)”
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Advantages and
Disadvantages of each form
of business Organization
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Sole proprietorship
Advantages Disadvantages
• Easiest to start and set up; only • Unlimited liability
minimal requirement set by the
government.
• Only one (owner) decides for • Limited Capital or Source of
business. Capital
• All profits are for the owner. • Loss are solely shouldered by the
owner
• The business is not taxed. • Limited life
• Easy to dissolved
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Partnership
Advantages Disadvantages
• Easy to form; mere agreement • Unlimited liability
unless stipulated can organize and
form one partnership
• Combined resources of partners ( • All partners may be held liable for
capital, skill, and industry) the action of one partner ( Agent of
partnership)
• Lesser government requirement • Restricted transfer of ownership.
and supervision Requires the consent of all partners
before transfer of interest be
enforceable.
• Tax – exempt as corporation if • Limited Life
commercial corporation.
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Corporation
Advantages Disadvantages
• Limited liability – Shareholders are • Most costly and difficult to
not legally liable for the corporate organize (higher cost of
unpaid outside and within incorporation)
liabilities.
• Ease of transfer of interest in case of • More Government requirement and
incapacity of one shareholder. regulations of supervision to
follow.
• Power of succession – unlike the • Taxed at flat 30%
other types of business
organization, corporation can still
exist and continue in spite of
incapacity of one shareholder.
• Greater source of resources
• Unlimited Life – may renew its life
every 50 years.
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Activity
assessment
Activity 4.1: Classify each item as to ownership
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Merchandising Business
• This business engages in “Buying” and “Selling” of
goods. This type of business buys goods and sells it
at its present condition not subject to any
conversion. The primary means it offers its client is
tangible one – “Product”
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Manufacturing Business
Type Activity Structure Examples
Manufacture Designing Taking raw Vehicle assembly,
Products, materials and Construction,
aggregating using equipment Engineering,
components and and staff to Electricity, Food
assembling convert them into and drink,
finished products finished goods Chemicals, media,
Pharmaceuticals,
Water
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Definition of terms:
• Merchandise Inventory – are goods held for sale by
a merchandising business.
• Revenue – or sometimes called “Income” is the flow
of resources towards the business for the
performance of services.
• Raw materials – are converted into finished
products in a manufacturing business.
• Finished Products – are the products sold by a
manufacturing concern.
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Activity
assessment
Activity 5.1: Classify each item as to the activities done in a business organization
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