Assets of an Enterprise

1. The current assets, which are short-lived assets. They are composed of cash, inventory, accounts
receivables, and other current assets.

2. The long-lived or fixed assets. They are composed of property, plant, and equipment.

3. The other assets. They are composed of organizational and pre-operating expenses.

Liabilities of an Enterprise

1. Current liabilities such as suppliers’ credit and other short-term credit

2. Long term debt

3. Owner’s equity

Forms of Business Organization

• Sole Proprietorship

• Partnership

• Corporation

Sole Proprietorship

 The simplest and easiest enterprise to organize

 The owner or entrepreneur has sole control over the enterprise, thus, reaps all the profits and,
also, all the losses.

 There is no distinction between the owner and the enterprise, meaning, the entrepreneur is
personally answerable and obligated to fulfill all the terms and conditions of any business contract that
he or she enters into.

Partnership

 Two or more persons binding themselves into a contract to contribute money, property, and
expertise in a common venture with the intention of dividing the profits among themselves

 Can own its own assets, can incur its own liabilities, and can sue and get sued

 A minimum of two persons can constitute a partnership, but there is no limit to the number of
persons in a partnership

 The decision of one partner is binding to all the other partners

Types of Partnership Based on the Liability of the Partners

 A general partnership is composed of partners who are liable individually and collectively to all
those who have claims against them. Claimants can run after all the personal assets of all the partners.

 A limited partnership consists of partners who have limited liabilities while others in the
partnership have unlimited liabilities.
Corporation

 Has a separate legal personality quite distinct from the investors who contributed money to the
enterprise Can own its own assets, can incur its own liabilities, and can sue and get sued

 Can be formed or incorporated by, at least five, or at most 15 natural persons

 Once the corporation is established, there is no limit to the number of natural or juridical
persons who can invest in the corporation.

Types of Corporation

1. Stock Corporation

2. Non-Stock Non-Profit Corporation

3. Close Corporation

4. Corporation Sole