Week 1 Exercise Accounting and Business Organizations

Week 1 Exercise Accounting and Business Organizations -...

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Week 1 Exercise Accounting and Business Organizations Melissa Krol Exercise 1-1 Distinguishing business Organizations C5 Match The following describe several different business organizations. Determine whether the description refers to a sole proprietorship, partnership, or corporation. a. Ownership of Spirit Company is divided into 1,000 shares of stock. Corporation b. Delta is owned by Sarah Gomez, who is personally liable for the debts of the business. Proprietorship c. Jo Chen and Al Fitch own Financial Services, a financial services provider. Neither Chen nor Fitch has personal responsibility for the debts of Financial Services. Corporation, because neither owner has personal responsibility for the debts of the company. d. Sung Kwon and Frank Heflin own Get-It-There, a courier service. Both are personally liable for the debts of the business. Partnership e. XLT Services does not have separate legal existence apart from the one person who owns it. Proprietorship f. BioProducts does not pay income taxes and has one owner.
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Unformatted text preview: Proprietorship g. Tampa Biz pays its own income taxes and has two owners. Corporation Exercise 1-4 Identifying accounting users and uses Much of accounting is directed at servicing the information needs of those users that are external to an organization. Identify at least three external users of accounting information and indicate two questions they might seek to answer through their use of accounting information. Lenders will want to know if a company can repay a loan with interest and if the company seems stable enough to stay in business through the life of the loan. Labor unions would want to know how much to ask for in yearly raises for employees and if the company can afford health, dental, and other benefits such as a retirement plan. Customers would want to know if the company they purchase product from will be able to stay in business and if they have the capital to backup their product with warranties and guarantees....
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