4FMG1_041140597_TMA-1....docx - BBF302/05 Financial Management and Analysis Date of submission Name IC no Student ID H/P no Tutorial Tutor On date Late

4FMG1_041140597_TMA-1....docx - BBF302/05 Financial...

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BBF302/05 Financial Management and Analysis Date of submission [ ] On date [ ] Late Name KHOR HAO YUN IC no. 941222-07-5556 Student ID 041140597 H/P no. 017-4488422 Tutorial 4FMG1 Tutor SHAMINI AP SRIRENGAM QUESTION 1 Sole Proprietorship Business organization own by single owner. In addition, the owner of the organization has the responsibility to operate the business by himself/herself, it including make any 1
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decision in term of financial and managing the business’s operating. Furthermore, owner of an organization in term of sole proprietorship will be entitle to enjoy the full profit earn by business. However there is also a risk to absorb any losses incurred by the business since the business have no legally separate entity from itself. Thus, unlimited liabilities in case of solvency. Partnership Partnership build up by two or more shareholders. According to the Partnership Act 1965 (Act 135) in Malaysia, partnership shall be established via a binding contract between the partners. Profit sharing between shareholders of a partnership shall follow the contract that pre-agreed in the beginning. While the liabilities for partnership is also unlimited liabilities as it is no legal distinction between the business and its owner. Partnership will be have more chance to expand in business since there are more shareholders thus more capital available to expand their business. Corporation Corporation is established by more shareholders via a legal contract who hold the common stock or preferred stocks of a firm. Shareholders for a corporation are having limited liabilities in the case of solvency and also losses incurred in the business by limited only to the amount of their shared that were bring invested in the firm. Thus, legal separation between the business and ownership is required in this form of business organization. In addition, the corporation has the right to sue or be sued by its own name. Company also can own a property or execute a contract in its own name. Lastly, each shareholders is giving a voting right to vote for the board of directors (BOD) to operate the firm. Type of Business Organizations Structure Advantages Disadvantages Sole Simple and easy to set Owner pays personal tax 2
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Proprietorship up Least amount of legal documentation Owner entitled all profits Lower start-up costs and lower operational overhead Subjected to fewer regulations rate on profits Have to bear unlimited liabilities or losses incurred in business Limited business lifetime(regarding to owner life time) Limited capital, thus difficult to expand business. Partnership Easily to set up since partnership agreement easily to formed Involves more individual owners and therefore usually more expertise High potential to expand business since it is easier to get capital compared to sole proprietorship.
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