Chapter 2 Outline

Chapter 2 Outline - Chapter 2 - Learning Objectives Explain...

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3/11/11 Chapter 2 - Learning Objectives Explain the purpose of business organizations Explain and contrast ownership structures of business organizations Explain and contrast types of businesses Explain and contrast different business strategies Explain and contrast the primary types of business activities Explain what an account is and how it helps in the recording process Define debits and credits and explain how they are used to record business activity
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3/11/11 Objectives of Business Providing products or services that … are valued in the market place … benefit the community providing employment opportunities for individuals living in the community … generate profit creating investment earnings for owners/investors
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3/11/11 Selection of Organizational Legal Business Forms Control Profit Sharing Taxation
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3/11/11 Types of Businesses Service Company Production/ Manufacturing Company Merchandising Company Wholesaler Retailer
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3/11/11 Business Strategies Cost Leadership Differentiation
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3/11/11 66 Forms of Business Ownership Sole proprietorship Corporation C corp vs. S corp Partnership General vs. limited
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3/11/11 Forms of Business Organization 77 Owned by one person Sole Proprietorship Partnership Owned jointly by two or more individuals Corporation Owned by one or more persons called “stockholders”
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3/11/11 Forms of Business Organization 88 Majority of all business (70%) Formation is simple and relatively inexpensive Sole Proprietorship Partnership Common for small businesses and professional practices Corporation Organized under the laws of a particular state
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3/11/11 Forms of Business Organization 99 Owner is personally liable for the debts of business Sole Proprietorship Partnership Partners are jointly responsible for the debt of the partnership Corporation Legally separate from owners. Stockholders’ liability limited to amount of investment
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3/11/11 Forms of Business Organization 1010 Can be formed or dissolved at the wishes of the owner Sole Proprietorship Partnership Automatically dissolved when any partner leaves Corporation Ownership can be easily transferred without affecting corporation Since corporations conduct the majority of business in the United States, we will be focusing on the corporate form of organization
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3/11/11 1111 Forms of Business Ownership Compare with respect to: Ease of Formation and Operation Ease of Raising Capital Liability Issues Taxation
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3/11/11 Forms of Organizational Sole Proprietorship Owned by one person Formation is simple and relatively inexpensive Owner is personally liable for the obligations of business Owner pays taxes of business Issues with transfer of business Limited financial and human resources
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3/11/11 Forms of Organizational Partnerships (General or Limited) Owned jointly by two or more individuals Must establish rights and obligations of all partners
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Chapter 2 Outline - Chapter 2 - Learning Objectives Explain...

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