BUSINESS - An organization or economic system where goods and services are exchanged for one another or for money

. Every business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit. Businesses can be privately owned, not-for-profit or state-owned. An example of a corporate business is PepsiCo, while a mom-andpop catering business is a private enterprise. Different forms of business organization Sole proprietorship Also referred to as “single proprietorship,” a sole proprietorship is the most simple form of business and the easiest to register, through the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the Department of Trade and Industry (DTI). It is owned by an individual who has full control/authority of its own and owns all the assets, as well as personally answers all liabilities or losses. The fact that it is run by the individual means that it is highly flexible and the owner retains absolute control over it. The problem, however, is that a sole proprietor has unlimited liability. Creditors may proceed not only against the assets and property of the business, but also after the personal properties of the owner. In other words, the law basically treats the business and the owner as one and the same. This uniform treatment also has important tax implications. Partnerships and corporations may lessen their tax liability through a myriad of business expenses and other tax avoidance techniques. These tax deductions may not be applicable to a sole proprietorship. Also, the potential growth and reach of a sole proprietorship pale in comparison with that of a corporation. Partnership A partnership consists of two or more persons who bind themselves to contribute money or industry to a common fund, with the intention of dividing the profits among themselves. The most common example of partnerships are professional partnerships, like in the case of law firms and accounting firms. Just like a corporation, it is registered with the Securities and Exchange Commission (SEC). A partnership, just like a corporation, is a juridical entity, which means that it has a personality distinct and separate from that of its members. A partnership may be general or limited. In a general partnership, the partners have unlimited liability for the debts and obligation of the partnership, pretty much like a sole proprietorship. In a limited partnership, one or more general partners have unlimited liability and the limited partners have liability only up to the amount of their capital contributions. Unlike a corporation, which survives even when a member/stockholder dies or gets out, a partnership is dissolved upon the death of a partner or whenever a partner bolts out. Corporation A corporation is a juridical entity established under the Corporation Code and registered with the SEC. It must be created by or composed of at least 5 natural persons (up to a maximum of 15), technically called “incorporators.” Juridical persons, like other corporations or partnerships, cannot be

incorporators, although they may subsequenly purchase shares and become corporate shareholders/stockholders.

The liability of the shareholders of a corporation is limited to the amount of their capital contribution. In other words, personal assets of stockholders cannot generally be attached to satisfy the corporation’s liabilities, although the responsible members may be held personally liable in certain cases. For instance, the incorporators may be held liable when the doctrine of piercing the corporate veil is applied. The responsible officers may also be held soliarily liable with the corporation in certain labor cases, particularly in cases of illegal dismissal. The biggest businesses take the form of corporations, a testament to the effectiveness of this business organization. A corporation, however, is relatively more difficult to create, organize and manage. There are more reportorial requirements with the SEC. Unless you own sufficient number of shares to control the corporation, you’ll most likely be left with no participation in the management. The impact of these concerns, however, is minimized by the army of lawyers, accountants and consultants that assist the corporation’s management. Different classifications of business 1. Service business – this provides intangible goods or services to customers. It usually generates profit by charging for labor or other services rendered to consumers, government or other companies. Below are examples of service businesses: Firms which offer professional services, such as accounting, legal, engineering, business consulting, customer service and architecture Transportation companies, such as airlines, shipping, land tours and forwarders Entertainment, such as artists and movie houses Hotels and restaurants Apartments Banks, lending companies and other financial institutions Telecommunication companies Event planners Medical and dental services Security and janitorial services Media, blogging and advertising

Website developers Graphic designers Business process outsourcing (BPO) companies and others 2. Merchandising business – this purchase products from other businesses or manufacturers and sell them to customers. Merchandising companies usually have merchandising inventories in their current assets account. They usually generate profit by providing markup price on their goods available for sale. These businesses include retailers and trading companies such as the following: Grocery stores Department stores Distributors Real estate dealers Car dealers 3. Manufacturing business – this converts raw materials, labors and overhead into finished products that are available for sale to customers. Manufacturing firms includes the following companies: Car manufacturers Wine and soft drinks producers Electronic parts manufacturers Producers of drugs and other medical products 4. Other businesses. This includes businesses that can’t be classified as service, merchandising or manufacturers. Examples are agriculture and mining companies. These companies are engaged in producing or exploration of raw or natural materials, such as plants and minerals. Advantages and Disadvantages of Business Organization Types It is important to understand the different types of business organizations types such as a sole proprietorship, partnership, and corporation. A business’s organizational structure influences issues, legal issues, financial concerns, and personal concerns.

A Sole Proprietorship is a business with one owner who operates the business on his or her own or employ employees. It is the simplest and the most numerous form of business organization in the

United States, however it is dangerous as the sole proprietor has total and unlimited liability. Self contractor is one example of a sole proprietorship.

Advantages of a sole proprietorship

Simplest and least expensive form of business to establish and to dissolve. The owner is making all the decisions and controlling the whole operations. All profit flows directly to the owner. It is subject to fewer regulations. It has tax advantage: any income is declared as the owner’s personal income tax return, therefore there are no corporate income taxes. Disadvantages of a sole proprietorship

The owner is responsible for all the obligations of the business. It is difficult to raise capital: it can only use the owner’s personal saving and consumer loans. A Partnership is a business with two or more individuals owns and manages the business. Partners share the unlimited liabilities of the business and operate the business together. There are three classification of partnerships: general partnership (partner divide responsibility, liability and profit or loss according to their agreement), limited partnership (in additional at least one general partner, there are one or more limited partner who have limited liability to the extent of their investment), and limited liability partnership (all of the partners have limited liability of the business debts; it has no general partners).

Advantages of a partnership

It is relatively easy to form but considerable amount of time should be invested in developing the partnership agreement. It is easier to raise capital compared to a sole proprietorship as there are more than one investor. Any income is declared as the partners’ personal income tax returns, therefore there are no corporate income taxes.

Employees may be motivated and attracted to the business by the inventive to become a partner Disadvantages of a partnership

Partners are jointly responsible for all the obligations of the business. Partners must make decision together therefore disputes or conflicts may occur. It may eventually lead to dissolving the partnership. A corporation is a limited liability entity doing business owned by multiple shareholders and is overseen by a board of directors elected by the shareholders. It is distinct from its owners and can borrow money, enter into contracts, pay taxes and be sued. The shareholders gain from the profit through dividend or appreciation of the stocks but are not responsible for the company’s debts.

Advantages of a corporation

It can raise additional funds through the sale of stock. Shareholders can easily transfer the ownership by selling their stock. Individual owner’ liability is limited to the value of stock they are holding in the corporation. Disadvantages of a corporation

It is restricted by more regulations, more closely monitored by governmental agencies and are more costly to incorporate than other forms of the organizations. Profit of the business is taxed by the corporate tax rate. Dividends paid to shareholders are not deductible from corporate income, so this part of income is taxed twice as the shareholders must declare dividends as their personal income and pay personal income taxes too.

WHAT IS ACCOUNTING? The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit. The four phases of accounting are as follows:

Recording

Recording is the first phase of accounting in which all monetary information is recorded in order to make a record that can be used for various needs. Accounting records are used for taxes, budgeting, reporting and business plans.

Without recording the monetary transactions it will be hard to determine where a business or person has spent their money. Accounting is used in personal and business situations.

During the recording phase, transactions have to be classified into categories. This is for tax purposes. In taxation there are different categories that can provide savings.

Classifying

In order to determine how much one spent in each of the categories one has to classify the records. For example in a business, office supplies can be deducted from the taxes. Dining and entertainment can also be used as a deduction.

Summarizing

After the recording phase and the classification stage comes summarizing the various categories into a linear sheet of information that is easier to read. From this one can discover how much was spent, what was kept, what was paid out, where and other information.

The summarizing stage makes the interpretation of the data that much easier. One has to be able to interpret the data to find out what may be changed, what has changed, and where the person or company is going financially. Often in the interpretation things such as where one can budget better or where one needs to find money for the next year can be found.

Interpreting

If you look at it from a business standpoint there may be equipment that is needed so interpreting the data can help find the extra money for the equipment. It can also be used as a phase to determine stock information.

The four phases of accounting are recording, classifying, summarizing and interpreting. Some people who work in finance often say that communication, although it is not officially one of the accounting phases, it should still be considered an important step. This means that good communication must be observed during all four phases of the accounting cycle to help things run as smoothly as they possibly can.

• The first phase of accounting is recording which can also be called bookkeeping. During this phase, any financial transactions that have taken place over the financial period, whatever time frame that may be, must be chronologically recorded in a systematical way. The accounting period can either be each month, quarterly or at the end of every year. The correct books and databases must also be used. • The second phases of accounting is classifying, which means that all financial items and transactions must be sorted, organized and grouped under certain names, categories and account depending on the nature of the transaction for example, travel expenses. • The third phrase is summarizing means that all data has to be summarized at the end. It is essential that this summarized data is easy to understand for people who work within the accounting department and for people who are not, as these files may be read by people from all departments within the company. Visual aids such as charts and graphs may also be used alongside the data presented. • The final stage of accounting is interpreting which is where people look at the data that has been recorded, classified and summarized and they interpret that data. By doing this, the people examining the data will be able to reach informed decisions about the financial status of a company. This data will also be used to come up with future financial plans for the business.

Answer: The following are the users of accounting information system; Shareholders of a company: Company's shareholders are the real owners of a business and needs information from those that manage the business on their behalf. Government: It is the duty of government to protect lives and property and in so doing will need information concerning every facet of her jurisdiction. Information from businesses in the form of financial report will help government properly formulate her strategic plan. Suppliers/ Creditors: Suppliers and creditors of a company need information concerning the financial position of a company. They need to be convinced that the company is liquid enough to meet with her obligations upon maturity. General public: The general publics will some time need information about the finance of a company in order to protect their interest. Students: students need information about company's finance to take some decisions that relates to courtesy visit and demand for bursary Employees: Employees and lower cadre managers are only interested in a company's financial statements because they want the safety of their daily bread. They may also want increase in wages and salaries. Management: Management in this are the top level managers and they have similar interest with ordinary managers. The only difference is that management also need this information to make economic decision that concerns the running of the business. Tax authority: They are only concerned about the returns that comes to them in the form of tax revenue. Trade union: Their concern is to seek a fair wage for their members. Knowing what a company is making will give them an insight of what to agitate for as fair wage Professional bodies: Professional bodies need accounting information as a tool that will be used to educate her members. Potential investors: For potential investors to be in a position to make investment decision some analysis has to be made and this can only be made from accounting information.

Accounting is very related to the business because in business we need to be responsible to the money that we are holding or to the money that was being used to make our business' stronger. In accounting using money wisely was being discussed not only spending money wisely but also recording different transactions that was really necessary to make a report of what do the business needs and what do the business weakness

Almost every business involves the exchange of money in one way or another. If I go to the store, the owner had to buy the merchandise, then I pay for it and they have to pay their rent, employees, taxes, and many other costs. It is very important to keep careful track of all this money. The store has to make sure what they are earning is greater than the total cost of running their business. If not, they will have to close shop. They also have to plan for paying bills, and save money each month so they will have enough to pay taxes each year. They need to know they are making enough to pay their employees. And they need to make sure no one is stealing any money from the cash registers, and keep track of the cost of the merchandise that is stolen from the store. Keeping track of all this flow of money is called "accounting." In a small store, the shop owner may do the accounting themselves. If a business is large enough, they are able to hire an "accountant" to do the accounting. The larger the business the more accountants they may have. It is an essential part of running a business.