Corporate accounting chapter 1, Apuntes de Contabilidad

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Degree in Business Administrationand Management CORPORATE ACCOUNTINGCHAPTER 1: INTRODUCTION TO^ CHAPTER 1: INTRODUCTION TO

CORPORATE ACCOUNTING

Corporate Accounting

Goal

Characteristic operations of corporations, in particular legal

problems and economic and accounting impact.

Entrepeneur definition:

Individual or company who professionally organizes the preciseIndividual or company who professionally organizes the precise

elements to produce goods or services for the market.

Natural Person or

Sole Propietorship (Sole Trader)

Legal entity or

Company

Entrepeneur types

A

sole

proprietorship

is

a^

business

owned

by

one

person who is known as the

proprietor. The proprietor

Types of Businesses Sole Proprietorshipshas a wide range of responsibilities including arrangingdisplays and selling to customers to name a few.^ Funds

to

run

the

business

usually

come

from

the

owner’s savings, friends, family, or from a bank loan.If the business prospers, the owner receives all of theprofits.

If

the

business

does

poorly,

the

owner

is

responsible

for

its

losses.

This

is

called

unlimited

liability.

• A business owned andoperated

by

one

person. • Approximately

Types of Businesses Sole Proprietorships

• Approximately

percent

of

all

businesses

in

the

world

are

sole

propietorships.

• Owner

has

unlimited

liability

for

all

debts

and

actions

of

the

business.

Unlimited

liability

The

debts

of

the

business

may

be

paid

from

Types of Businesses Sole Proprietorships Disadvantages of Sole Proprietorships^ The

debts

of

the

business

may

be

paid

from

the personal assets of the owner. • Difficult to raise capital. • Sole proprietorship is limited by his/her skills andabilities. • The death of the owner automatically dissolves thebusiness.

A

partnership

refers to a type of business in which two

or more individuals share the costs and responsibilitiesof owning and operating it. The

terms

of

the

partnership

are

recorded

in

the

Types of Businesses Partnership^ The

terms

of

the

partnership

are

recorded

in

the

partnership

agreement

.^

The

most

common

form

of

partnership is a general partnership.When two individuals form a

limited partnership

, the

partners are only responsible for the funds they bothinvested in the initial business. This is called

limited

liability.

• General

partnership

:^

A^

partnership

in

which

all

partners

have

unlimited

personal

liability

and

take

full

responsibility

for

the

management

of

the

Types of Businesses Partnership^ Types of Partnershipsbusiness.^ • Limited

partnership

:^

A^

partnership

in

which

the

partners’ liability is limited to their investment. • Joint

venture

:^

A

partnership

in

which

two

companies

join

to

complete

a^

specific

project.

The

partnership ends after a specified period of time. • Strategic

alliance

:^

A

partnership

in

which

two

businesses work together for mutual benefit.

• Shared

decision

making

and

management

responsibilities. • Easier

to

raise

capital

than

in

a^

sole

Types of Businesses Partnership Advantages of Partnerships^ •

Easier

to

raise

capital

than

in

a^

sole

proprietorship. • Few government regulations. • Business losses are shared by all partners.

A^

corporation

is

a^

business

granted

legal

status

with

rights,

privileges, and liabilities that are distinct from those of the peoplewho work for the business.Corporations can be small such as a one-person business or largesuch as A

multinational

that conducts business in several different

countries

.

Types of Businesses Corporations countries

.

Small portions of corporate ownership that are owned publicly arecalled

stocks

or

shares.

Individuals who own shares of a corporation are called

shareholders

and become

owners of the business. Shareholders have

limited

liability

.^

A

board of directors

runs a corporation that is owned by

shareholders.A^

publicly

traded

corporation

that

makes

a

profit

may

pay

out

dividends

to shareholders.

Types of corporations^ • C-corporation

:^

The

most

common

form

of

corporation.

It protects the entrepreneur from being

personally

sued

for

the

actions

and

debts

of

the

corporation

.^ They

can

be

private

or

public

companies

Types of Businesses Corporations^ corporation

.^ They

can

be

private

or

public

companies

• Nonprofit corporation

:^

Legal entities that make money

for reasons other than the owner’s profit. • Limited

Liability

Company

(LLC):

A

new

form

of

business

ownership

that

provides

limited

liability

and tax advantages.

• Legal assistance is needed to start a corporation. • Start-up is costly. • Corporations

are

subject

to

more

Types of Businesses Corporations^ Disadvantages of corporations

• Corporations

are

subject

to

more

government

regulations

than

partnerships

or sole proprietorships. • A

lot

of

paperwork

is

involved

in

running

a

corporation. • Income is taxed twice.

A

co-operative

is owned by the workers or members who buy

the products or use the services that the business offers. This

type

of

business

is

motivated

by

service

and

not

profit

.

Types of Businesses Co-Operative^ This

type

of

business

is

motivated

by

service

and

not

profit

.

Adaptations of this business model include consumer, retail,and worker co-operatives.

The

franchiser

licenses the rights to its name, operating

procedure,

designs,

and

business

expertise

to

another

business called the

franchisee

A

franchise agreement

can provide the franchisee with

•^

a^

ready

made,

fully

operational

business

Spanish Types of Businesses

•^

a^

ready

made,

fully

operational

business

•^

brand recognition that is appealing to consumers

Requirements before a franchise is awarded may include

•^

paying the

franchise fee

•^

agreeing to pay a monthly percentage fee as well asany national or local advertising costs

-^

purchasing all supplies centrally from the franchiser

-^

participating in franchiser standards training

According Spanish legislation:

-^ Civil Companies: founded in accordance with the Civil Code. It is nonecessary its registration in the Mercantile Registry •^ Mercantile Companies:

founded in accordance with the Mercantile

Code. It is necessary its registration in the Mercantile Registry. •^ Irregular Mercantile Companies: founded in accordance with the

Spanish Types of Businesses

-^ Irregular Mercantile Companies: founded in accordance with the Commerce Code but not registered in the Companies Registry (they will beconsidered as a General Partnership).• Co-operative Companies: those included in the ‘Cooperative CompaniesRegistry’ and not in the Mercantile Registry.

“Personalistas”

Capitalist

Personal traits ofpartners are relevantto the partnership