Introduction To Financial Statements
CHAPTER 1
Introduction to
Financial Statements
Chapter Outline
Study Objective 1 - Describe the Primary Forms of Business Organization
A business may be organized as a sole proprietorship, partnership, or corporation.
Sole proprietorship - a business owned by one person
Advantages
simple to establish
owner controlled
tax advantages
Disadvantages
proprietor personally liable for all business debts
financing may be difficult
transfer of ownership may be difficult
Partnership - a business owned by two or more people
Advantages
simple to establish
shared control
broader skills and resources
tax advantages
Disadvantages
partners personally liable for all business debts
transfer of ownership may be difficult
Corporation - a separate legal entity owned by stockholders
Advantages
easier to transfer ownership......
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