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Sole proprietorship

Partnership

Corporation

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Advantages: Easier to form as compared to

partnership

Generally have uncomplicatedbusiness transactions andminimal regulatory requirements

Only ONE OWNER Decisions can be arrived at in less

time

En o s all the rofits earned

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Disadvantages: Limited ability to raise capital

Can only expand in proportion to theincrease in resources contributed bythe owner

Does not receive second opinion ondecisions made

Bears the risks and losses which maybe incurred

Unlimited personal liability for the

debts

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Advantages:

TWO OR MORE PERSONS

Governed by the Civil Code of the

Philippines Easy to organize as compared to

a corporation

The burden of management isusually shared among partners

More ideas are exchanged andbrainstormed

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Disadvantages: Can raise more capital however

depends on the capability of eachpartner to invest resources

The plurality of owners may result todisagreements regarding ideas andmanagement style

Life is fragile

it may dissolved byagreement, withdrawal, death andincapacity

Unlimited personal liability

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Advantages: Greatest capacity to raise capital

Shareholders may transfer their

shares without the need to obtainthe consent of other shareholders

May exist for a period not longerthan 50 years, subject to renewal

Limited liability of owners

Composed of at least 5 naturalpersons (up to a maximum of 15)

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Disadvantages:

Cost of forming and managing isrelatively high

Subject to greater scrutiny, regulation,

control and supervision by thegovernment

Management is more complex

Has limited powers, as expresslystated in the Corporation Code of thePhilippines and its own Articles ofIncorporation

Subject to higher income tax rate

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Service business

Merchandising business

Manufacturing business

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These enterprises purchasegood from suppliers and ,without altering the state of

the good, sell the same at ahigher price than cost.

Service Business

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EXAMPLE

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EXAMPLE

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Involves the most complex

activities Sells goods at a higher price

Produces the goods that itsells to customers

Manufacturing

Business

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EXAMPLE

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American Institute of Certified PublicAccountants defines accounting as follows:

Accounting is the art of recording,classifying and summarizing, in a

significant manner, and in terms of money,transactions and events which are in part atleast of a financial character, andinterpreting the results thereof.

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This accounting process is the

assigning of peso amounts to the

accountable economictransactions and events.

Measuring

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The process of preparing and

distributing accounting reports to

potential users of accountinginformation.

Communicating

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Implicit in the communication

process are the recording,

classifying and summarizingaspects of accounting.

Communicating

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The process of systematically

maintaining a record of all

economic business transactionsafter they have been identified

and measured.

Recording or Journalizing

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The sorting or grouping of similar

and interrelated economic

transactions into their respectiveclasses.

Classifying