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(I) Explain The Definition of Accounting: Chapter 1: Introduction To Accounting
(I) Explain The Definition of Accounting: Chapter 1: Introduction To Accounting
Question 1
(ii) State two (2) examples of external users and the importance of
accounting information for each user.
Question 3
(i) Kaisara starts a book distribution business worldwide with a capital
contribution of RM50,000. Kaisara offers Aisyah to invest in her business
by offering benefits in accordance with the amount of capital contributed
by Aisyah.
a) What type is Kaisara’s business?
Sole proprietorship
(ii) List three (3) types of business ownership. State an advantage of each
type of business ownership.
Sole proprietorship
o You're the boss
o It's easy to get started
o You keep all profits
o Income from business is taxed as personal income
o You can discontinue your business at will.
Partnership
o Two heads are better than one
o It's easy to get started
o More investment capital is available
o Partners pay only personal income tax
o High-calibre employees can be made partners
Company
o Stockholders have limited liability
o Corporations can raise the most investment capital
o Corporations have unlimited life
o Ownership is easily transferable
o Corporations utilize specialists
(iii) Explain two (2) advantages and two (2) disadvantages of sole
proprietorship.
ADVANTAGES
Easier to set up than other business entities. A person becomes a sole
proprietor simply by running a business
The owner maintains 100% control and ownership of the business by
being entitled to the profits and control of the business.
DISADVANTAGES
Unlimited liability: If the business fails and the assets are not enough to
cover the debt, the creditors have a right against the owner's personal
properties
Lack of staffs can effect slowness of company’s going process
Question 4
State four (4) types of financial statements.
Statement of Profit or Loss (Statement of Comprehensive Income)
Statement of Financial Position (Balance sheet)
Statement of Owner’s Equity
Statement of Cash Flows