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Business Organization and Trends
Business Organization and Trends
Business Organization and Trends
(Financial Management 1)
3rd Trimester, AY 2020-2021
Business Organization and Trends
Learning Outcomes:
1. Explain the basic legal forms of business organizations such as
sole proprietorship, partnership and corporation
2. Know the advantages and disadvantages of adopting the
a. Sole Proprietorship
b. Partnership
c. Corporation form of business organization
3. Determine the form of business organization most adaptable to an
enterprise
4. Understand the important business trends such as
– Increased globalization of business
– Improving information technology
– Outsourcing
And how they impact a business firm’s business operations
The Organization of the Business Firm
• The business firm is an entity designed to organize raw
materials, labor and machines with the goal of producing
goods and/or services.
1. Purchase productive resources from households and
other firms,
2. Transform them into a different commodity, and
3. Sell the transformed product or service to consumers.
• For business firms engaged in retail or trading activities , no
transformation of goods into a different commodity takes
place, as they just buy and sell the product as is.
In market economies, most firm choose their own price, output
level and methods of production. They get benefits of sales
revenues but also pay the costs of resources they use.
Legal Forms of Business Organization
PROPRIETORSHIP
• A sole proprietorship is a business owned by a single person who
has complete control over business decisions. This individual owns
all the firms assets and is responsible for all its liabilities.
• From a legal point of view, the owner is not separable from the
business and is personally liable for all debts of the business.
• From an accounting perspective, the business is an entity
separate from the owner therefore all financial statements of the
business present only those assets and liabilities pertaining to the
business.
• The owner cannot be paid salary from the business, instead he can
withdraw funds or other property from the business, and as such
treated as capital reduction.
• The business does not pay any income tax, but the owner reports
in his personal income tax return any profit or loss of the business.
Legal Forms of Business Organization
PROPRIETORSHIP
ADVANTAGES DISADVANTAGES
•QUESTIONS????
•REACTIONS!!!!!
END OF PRESENTATION