Types of Business Organizations 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 are 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).