INTRODUCTION TO FINANCIAL ACCOUNTING
UNIT 1: ACTIVITIES
QUESTION 1
Examine the statements below and indicate with a cross (X) in the answer book the type of business
entity/entities that each one would match.
If you are in business on your own, for yourself, without major expansion plans
If you have other investors
If you know the investor/s well and trust them, and if the business is simple with not too many assets
over which disputes can arise
Investors with a short-term business in mind
If some of your investors are not people but organisations
If shareholding is (or will become) more complex than a simple 50/50 or 60/40 split.
If you will be running a really low-risk business
If the business risk is slightly higher
If you want to tender for government contracts
If you are working on an absolute shoe-string budget
If you have a fair amount of financial resources
QUESTION 2
Identify the type of business entity from each of the following statements:
2.1 This business entity may be founded and managed by just one director.
2.2 Business entities in which both the current and previous directors may be held jointly and
severally liable for any debts and liabilities which occur during their time in office.
2.3 The simplest of business entities with no separation of assets and liabilities of the owner and the
business.
2.4 Business entities which issue shares and are often listed on a stock exchange.
2.5 Business entities with no separation of assets and liabilities of the owners and the business.
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