Chapter 2 Types of Business Organizations Forms of

Chapter 2 Types of Business Organizations

Forms of Business Entities There are four main forms of businesses: • Sole trader (proprietorship) where one person or a single family owns and operates the firm. • Partnership with two or more persons owning and operating the firm. • Corporation (limited liability company) where two or more persons (called shareholders) own the business but a board of directors manages its daily affairs. • Cooperatives where its members own a non-profit organization primarily for the benefit of members

Basic Financial Statements All business types must produce four basic financial statements: • Trading Account Collectively called • Profit and Loss Account Income Statement • Balance Sheet • Cash Flow Statement

IMPACT OF TECHNOLOGY • These financial statements, and all accounting information, are often supported by computer technology. • Whilst computers assist in the accounting process, they do not replace existing accounting principles.

IMPACT OF TECHNOLOGY Computer technology, when efficiently applied, will provide greater: • Control • Accuracy • Storage • Speed Remember CASS

IMPACT OF TECHNOLOGY There also disadvantages of using computers in accounting. These include: • high cost incurred for acquisition and set up • costly to retrain staff • increased labour cost due to higher entry level skills • upgrade and maintenance costs • costs of all security measures to prevent unauthorized users • system failure can lead to loss of information and delays in operations

MEASURES TO PREVENT UNAUTHORISED ACCESS • Implement security systems, for example, passwords or encryption codes. • Install software (anti viruses) programmes in order to deter viruses such as Trojan. • Create back-up systems in case there is a power outage or loss of data (on a hard copy on a venue off-site or on a flash drive).