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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