ACCT1101 - Lecture 1

Total businesses in australia 23 44 proprietorship

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Unformatted text preview: rvices low relative to the selling prices of these goods and services. (Control costs) (Control Risk decreases if a business operates effectively and efficiently as these businesses are competitive in financial, supplier and product markets. 37 Another use of accounting information: Another Accounting information can help owners and creditors business risk Evaluate return How? How? by helping to measure and monitor both the effectiveness and efficiency of a business. How investors choose among alternative among alternative How They choose investments? investments? investments by evaluating the amount, timing and uncertainty of returns they expect to receive 38 6. Identify business ownership structures and their advantages and disadvantages. Total businesses in Australia 23% 44% Proprietorship Partnership Company 33% Data source: Australian Taxation Office 39 Business ownership Business ownership Total business in Australia income 1% 7% 92% Proprietorshi p Partnership Company Data source: Australian Taxation Office 40 Characteristics Proprietorship Partnership Companies Proprietary Limited Number of owners/shareholders 1 2 or more 1 or more large Size of the business Small Small/ Medium Small/ Medium Large Business is separate legal entity from owners No No Yes Yes Liability of owners for the debts of the business Yes Yes No (Ltd liability) No (Ltd liability) Tax of Individual owners affected by income of the business Yes Yes No until… No until… Ability to borrow larger sums of money Normally not Normally not Normally not Normally yes Owners ability to make decisions, control activities, access day to day information High Medium+ Medium- Low Characteristics Proprietorship Partnership Companies Proprietary Continuity independent of owners Limited Normally not Normally not Yes Yes Owner Partners Owner/ Board of Directors Board of Directors / Professional management Comparative degree of regulation Low Low Medium High Owners can enter into contracts or agreements that bind the business or other owners Yes Yes No (unless they are managers) No (unless they are managers) Moral Hazard an issue? No No Depends.. Yes Managers of the business 7. Explain why ethics are important for businesses and accounting • Ethics • Ethics • principles that justify the value judgements that people use to explain their behaviour. What is good or bad What is good or bad can be looked at from two primary perspectives: Self-interest (what Self-interest is good for me), is which focuses on personal wealth and power and Concern for others, which is necessary for harmonious living in stable communities communities 43 A company’s financial statements are meant to convey information about the company to internal and external users in order to facilitate decision-making. If the information in the financial statements does not convey a realistic picture, the decisions based on this information can have disastrous ON NR consequences E Other examples? 44 Next Lecture: Next Developing a Business Plan: Cost-VolumeProfit analysis Tutorial questions next week: Juchau Ch 1 Questions: 1.1, 1.4, 1.6, 1.7, 1.14, 1.15 Exercise: 1.15 Problem: 1.23 (A&B) See you next week 45...
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This note was uploaded on 08/11/2013 for the course ACCT 1101 taught by Professor Ajay during the One '12 term at Queensland.

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