Contents Question No. 1 1 Explain the strengths and weaknesses of these kinds of business ownership: sole proprietorship, partnership and limited company. 1 Question No. 2 3 Discuss 4 main distinctions/ differences between Financial Accounting and Management Accounting 3 Bibliography 5 Question No. 1 Explain the strengths and weaknesses of these kinds of business ownership: sole proprietorship, partnership and limited company. There are different types of business ownership. Sole proprietorship, partnership and limited companies are such ownerships which has their own advantages and disadvantages. 1. Sole proprietorship is a business with a single owner who operates the business himself or get employees work for him. It is the …show more content…
The focus of financial accounting is providing information about the functioning of the business to its users, whereas the focus of Management accounting is providing information to help the management in evaluating the performance and planning for the future. Accordingly, a diversification of users can be observed. Both internal management and external parties use financial accounting statements, while the management accounting is only used by internal management. Therefore Management accounting is very confidential for an organization while in contrary Financial accounting is to be publicly reported. 3. There is a prescribed format for Financial Accounting to be done, while there is no specified format for Management Accounting which can be customized accordingly. Also Financial Accounting is mainly done for a specific period, which is usually one year whereas Management accounting is done according to the needs of the management. 4. Financial accounting is a must for any company. It is also required to be published and audited by statutory auditors. Management accounting does not require information to be published or audited and it is a voluntary function of the organization. The above mentioned can be identified as factors which diversify these two branches of accounting, Financial and
Financial Accounting is concerned with the past, while Managerial Accounting is concerned with the future.
1) Describe the basic features that distinguish the four basic forms of business ownership sole proprietorships, general partnerships, C corporations, and limited liability companies.
Sole Proprietorship. Sole owner of a business. The manager and the owner is the same person. The sole proprietorship has unlimited liability. You pay taxes as owner and
both a and b (Yes. The corporate structure provides for limited liability and ease of transferring ownership.)
1. Describe the basic features that distinguish the four basic forms of business ownership: sole proprietorships, general partnerships, C corporations, and limited liability companies.
• Control: A sole proprietor has total control of the company and they make all the good decisions and they must deal with decisions that did not turn out the way they intend. The other notable factor in being a sole proprietor of a business is what would happen to the business if the owner became ill or died; typically the business would stop operations based on the structure and debts would need to be resolved as well as customer commitments would need resolving based on the type of business.
“The accounting system generates the information that satisfies two reporting needs that coexist within an organization: financial accounting and managerial accounting” (Schneider, 2012, ch 1.1, para 1). Managerial accounting is the process of preparing reports and accounts required by management to make business decisions for daily, weekly, monthly, and yearly projects. Financial accounting is the branch of accounting that organizes accounting information for presentation to interested parties outside of the organization. Financial accountants produce annual reports for external
The structure of an organization will affect its financial management. Generally financial accounting is for outside use so they emphasize external reporting; which means they report to third parties such as; Medicare, Medicaid and other government entities and health plan payers. Managerial accounting is considered to be prospective as well as retrospective. It is of the upmost importance that the accountant must follow the guidelines principles and ethical standards of planning, controlling, organizing and directing, and decision making if they want to be successful at their job.
Describe the basic features that distinguish the four basic forms of business ownership: sole proprietorships, general partnerships, C corporations, and limited liability companies.
Some advantages of a sole proprietorship are that they have flexibility in operations. The sole proprietorship business is undertaken on a small scale. If any change is required in the operations, it is easy and quick to bring the changes. Another advantage in this type is the ease of promptness in decision-making, autonomy. When the decision is to be taken by one person, it is guaranteed to be quick. Thus, the entrepreneur, as a sole proprietor, can arrive at quick
Financial management is important to the organization because it provides pertinent finance and accounting information to help managers accomplish the purpose of the organization. Financial accounting provides accounting information to external users. On the other hand, managerial accounting is more for managers (internal users) to use for things like planning, budgeting, etc. The definition of finance has changed over the years, but it’s used to ultimately evaluate previous decisions and make assessments for future decisions of the organization.
3. Managerial Accounting deals with procuring of data for the organisation's management i.e. to serve the internal users with necessary accounting information to carry out the management tasks of planning, organising, actualising and controlling. " Management Accounting is the presentation of accounting Information in such a way as to assist management in creation of policy and in the day to day operations of an undertaking". 4. Financial Management deals with the process adopted by an organisation for taking financial decisions through analysing and interpretation of financial data for meeting the organisations objectives.
A major difference between financial accounting and managerial accounting is their differing uses in regards to present and future data for decision-making. Financial accountants prepare data from transactions that have already occurred and managerial accountants prepare statements in regards to future decision making for their company. According to countingtools.com, the economy is always changing and not everything can be predicted, therefore, managerial accounting could only be useful to a certain degree.
According to Will S, Ray H, & Eric E.N. (2009), management accounting is a branch of accounting that is concerned with providing information to managers who direct and control the firm’s operations. Management directing function seeks to effectively use both the human and raw material wealth of a firm to achieve organizational set objectives on routine basis. Controlling function is the art of tele-guarding the activities of the organization to consistently fall in line with set objectives. Management accounting achieves this function through effective budgeting.
This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making.