2602335

SUMMATIVE ASSESSMENT 1 FOR FINANCIAL ACCOUNTING

Candidate number:2602335

Total word count:

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Question 1

The legal process of Incorporation entities is required when a corporate entity

or company is established. Incorporation can be established in every region

and country in the world. In business, Incorporation is a way for a company to

establish a formal organization. The process of establishing a corporation

includes writing the company's articles of incorporation and enumerating the

company's shareholders. The way Incorporation entities work can help

companies and their owners generate many advantages. For example:

protect the owner’s assets from the company’s debts, allow easy transfer of

ownership to another party, usually get a tax rate lower than personal income,

and can be sold Stocks raise funds and so on. In an enterprise,

"unincorporated entity" refers to a business structure that has not yet gone

through the registration process. Unregistered entities are called sole

proprietorships or partnerships. This form of company has no limited liability.

Therefore, unincorporated entities need to bear all debts and personal

liabilities. The advantages of unincorporated companies are obvious. Setting

up a company is relatively easy and does not require a lot of paperwork. In

the short term, unincorporated companies are more cost-effective than

incorporating companies. If it is a partnership, once the business is in trouble,

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the entrepreneur can share the responsibility of the corporate debt. The

biggest difference between incorporated and an unincorporated business is

the way the owner is responsible for the actions and results of the

organization. The differences include liabilities, taxes, costs, and paperwork.

The way companies analyze business models can be made in the business

The best decision. In Liability, the owner of the incorporated business can be

exempt from any responsibilities undertaken by the company, and personal

assets will not be able to pay any debts of the company. The owner of the

unincorporated business needs to bear any responsibilities of the company,

and the personal assets need to pay the company In Taxation, incorporated

business can postpone the payment of some taxes and pay later, so the

company's cash flow is relatively loose. When unincorporated business

submits taxes, business losses can be used to reduce personal tax burden

and income. In paperwork In requirements, an incorporated business needs to

record the organization's activities and financial status in order to

communicate with shareholders. An unincorporated business does not need

to deal with most of these paperwork issues. The taxation of incorporated and

unincorporated entities will affect the financial statements. The financial

statements of the incorporated business will show business tax and there may

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also be some tax deductions. In the financial statements of the unincorporated

business, the tax part can be credited with personal tax. Unincorporated

business according to its Profits are subject to personal income tax.

Question 2

A good corporate governance must have policies that guide and control

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corporate behavior. The company needs a system of professional processes

and rules. The framework of the company is divided into shareholders,

management, board of directors and stakeholders. Corporate governance

policies need to be well-defined and enforceable, and cannot tolerate any

errors. Good corporate governance can bring a culture of integrity to the

company and enable employees to produce positive performance and

sustainable business. Good governance shows to the market that the

company has been well managed and regulated, and that the interests of

management and other stakeholders will not be divided into classes. If no

company has good governance, it can provide companies with a competitive

advantage. The board of directors is indispensable in the corporate

governance policy. The formulated governance policy needs to resonate with

the business management department to provide a clear future and goals. If

the governance policies set by the board of directors are effectively

implemented, doing so makes the success of any organization seem simple.

Not only the board of directors, but shareholders also play an important role in

governance, because shareholders need to select suitable directors to

appoint members of the board of directors.

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Reference List:、
1. HAYES, A., 2020, Incorporation. [online] Available at:
<https://www.investopedia.com/terms/i/incorporate.asp> [Accessed 1 May
2021].
2. Buchanan, C., 2020, What is an Unincorporated Entity? [online] Available
at: <https://www.companyformations.ie/blog/what-is-an-unincorporated-
entity/> [Accessed 1 May 2021].
3. Davoren, J., 2019, What Is the Difference Between Incorporated &

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Unincorporated Businesses? [online] Available

at:<https://smallbusiness.chron.com/difference-between-incorporated-
unincorporated-businesses-57463.html> [Accessed 1 May 2021].
4. Jean, Z., 2019, What is corporate governance and why is it important?
[online] Available at:<https://www.accru.com/2019/06/what-is-corporate-
governance/#:~:text=Good%20corporate%20governance%20fosters
%20a,are%20aligned%20with%20other%20stakeholders.> [Accessed 1
May 2021].
5. Board Management, 2020, The Importance of Corporate Governance.
[online] Available at:< https://sprigghr.com/blog/board-management/the-
importance-of-corporate-governance/>[Accessed 1 May 2021].
6.