Business Decisions and the Accounting Function

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xjuvgr1369

Business Finance

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Instructions

Respond to the following questions using grammatically correct language and appropriate APA citations. To achieve a proficient grade in this assignment, answer the proficient-level queries for each question. To achieve a distinguished grade, answer both sets of queries for each question.

  1. Question 1:
    • Proficient-level:
      • Identify and describe the three basic forms of business organizations.
      • What are the advantages and disadvantages of each form of ownership?
    • Distinguished-level:
      • Business entities can also be categorized by the type of business activities they perform. Identify and describe the three types. What do all three types have in common?
  2. Question 2:
    • Proficient-level:
      • Identify the primary objectives of every business.
      • What are the four basic financial statements that measure the primary objectives of every business?
      • Describe what information each statement presents and which of the primary objective(s) can be met through the information presented on the statement.
    • Distinguished-level:
      • Describe the difference between an asset, liability, and equity on a company's balance sheet.
  3. Question 3:
    • Proficient-level:
      • Identify the framework for the entire accounting process and describe its components and how they fit together to form this framework.
    • Distinguished-level:
      • Define the nature of an accounting transaction and provide multiple examples of these transactions.
  4. Question 4:
    • Proficient-level:
      • To allow the accounting process to run smoothly, accountants must rely on a set of underlying concepts or assumptions. Identify and describe each of the five concepts or assumptions.
    • Distinguished-level:
      • Match each of the concepts or assumptions to one or more of the financial statements that it applies to.
  5. Question 5:
    • Proficient-level:
      • Many accounting transactions will apply to one or more of the financial statements. In the case of the balance sheet, multiple account types can be affected. For each of the following items, provide an example of a transaction that would have the following effects on the items in a firm's financial statements. Provide five correct responses:
        • Increase an asset; decrease some other asset.
        • Increase an asset; increase a liability.
        • Decrease retained earnings; decrease an asset.
        • Increase an asset; increase retained earnings.
        • Decrease an asset; decrease a liability.
        • Increase a liability; decrease retained earnings.
    • Distinguished-level:
      • Correctly provide an example for all of the effects on the items in a firm's financial statements.
  6. Question 6:
    • Proficient-level:
      • Consider this scenario. James Stevens was taking an accounting course at State University. Also, he was helping companies find accounting systems that would fit their information needs. He advised one of his clients to acquire a software computer package that could record business transactions and prepare financial statements. The licensing agreement with the software company specified that the basic charge for one site was USD 4,000 and that USD 1,000 must be paid for each additional site where the software was used. James was pleased that his recommendation to acquire the software was followed. However, he was upset that management wanted him to install the software at eight other sites in the company and did not intend to pay the extra USD 8,000 due the software company. A member of management stated, "The software company will never know the difference and, besides, everyone else seems to be pirating software. If they do find out, we will pay the extra fee at that time. Our expenses are high enough without paying these unnecessary costs." James believed he might lose this client if he did not do as management instructed. Discuss whether you believe this is an ethical violation.
    • Distinguished-level:
      • Identify any laws that may have been broken as a result of this issue.

Write your responses in a Microsoft Word document and submit it as an attachment in the assignment area. Prior to submitting your assignment, review the Business Decisions and the Accounting Process Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Be sure to address the questions at the proficient and distinguished levels to achieve the highest grade possible.

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Explanation & Answer

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1. Question 1

A
1. Sole proprietorship.
This is the form of business organization owned by one person and
Requires the least capital to start.
2. Partnership.
This form of business organization may be owned by two or more
people. The owners share profits and losses.
3. Corporation.
This is the form of business organization that has a separate legal
entity from its owners. Its activities are controlled by a board of
directors elected by the shareholders.

B

1 Advantages of sole proprietorship.
a) Decision making is fast as it is only made by one person.
b) A small amount of tax is paid as compared to a corporation.
c) Few formal and legal requirements are required to form a
sole proprietorship.
Disadvantages of sole proprietorship.
d) The owner has unlimited liability and is personally liable
for the business debts.
e) Any losses incurred are born solely by the owner.
f) Difficulty in accessing funds from finance institutions due
to security of little value.
2

Advantages of a partnership.
a) In case of a loss it is shared among the partners.
b) The partners may have equal rights in the management of the
business.
c) Easier access to finances compared to sole proprietorship.
Disadvantages of a partnership.
d) Partners need unanimous consent of all partners before
transferring interest in the business.
e) The business is at risk of dissolution in case a partner dies or
withdraws.

f) Each and every partner is personally liable for the debts of the
business.
3 Advantages of a corporation.
a) The liability of shareholders is limited meaning they are not liable for
the business debts past the amount of their investments.
b) They have access to expert management as shareholders don’t run the
day to day business activities.
c) They have an easy access to finances due to availability of high value
security.
Disad...


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