Group 1

John lepante
Venus Viray
Jovenz richard Ong
Princess chua Iway
Queeny Patilano

FOR  FINANCIAL  STATEMENTS  OF  A  HOTEL  OR  RESTAURANT  Click here.

RESEARCH  ON  THE  FOLLOWING  TOPICS.  AND  GIVE  ONE EXAMPLE  OF 
EACH:

A. The Financial Environment/Financial System.

-A financial system is a network of financial institutions – such as

insurance companies, stock exchanges, and investment banks – that work
together to exchange and transfer capital from one place to another. Through
the financial system, investors receive capital to fund projects and receive a
return on their investments.

 A financial system can be perceived on a company, regional, or global scale,

which facilitates the practice of exchanging funds between one entity to
another.
 It involves various players such as insurance companies, stock exchanges,
investment banks, and more.
 Financial systems are regulated, as their processes influence and contribute
to the growth of many assets.

Financial markets involve various players, including borrowers, lenders, and

investors that negotiate loans for investment purposes. The borrowers and
lenders tend to trade money in exchange for a return on the investment at
some future date. Derivative instruments are also traded in the financial
markets as well, which are contracts that are determined based on an
underlying asset’s performance.

When determining the guidelines of raising capital within a financial system,

the project being funded and who funds them are decided upon by the
planner, who can be a business manager. Thus, the financial system is
typically organized through central planning, a market economy, or a
combination of both.

Example.
An example of one player within the financial system is the Bank of Canada
(BoC). The BoC promotes economic and financial welfare for Canadians by
cultivating a financial system whereby banks, credit unions, financial markets,
and other factors interact to ensure the economic landscape continues to
operate effectively for its citizens. The BoC achieves its objectives through the
following:

 Providing central bank services such as liquidity and credit

facilities: The Bank of Canada sources liquid funds to the financial
system and is often known as the lender of last resort.
 Developing and implementing national policy: The federal
government introduces legislation to implement a new retail payments
framework. The BoC would oversee the service with operational and
financial requirements, ensuring regulations are maintained.
 Oversees financial market infrastructures: The Canadian central
bank conducts regulatory oversight and acts as the resolution authority
for financial market infrastructures. They include payments systems
and clearing and settlement systems.

List of Financial System Banks

Banks

 Public banks
 Commercial banks
 Central banks
 Cooperative banks
 State-managed cooperative banks
 State-managed land development banks

Non-Bank Financial Institutions

 Finance and loan companies

 Insurance companies
 Mutual funds

B. Classification of Finance As to form of  Organization

What is Direct Finance?

Direct finance is a type of financial transaction in which two parties exchange money
without using a financial intermediary. This type of transaction is typically used for lending
and borrowing money, but it can also be used for other types of financial transactions,
such as investments and purchases.

Direct finance can be beneficial for both lenders and borrowers because it can save time
and money by eliminating the need for a middleman. Additionally, direct finance can
provide more flexibility than traditional financial transactions because the terms of the
agreement can be customized to meet the needs of both parties.
Direct Finance can be a great way for businesses to raise capital, without having to
go through traditional financial institutions. It can also be a great way for investors to
get involved in early-stage businesses and potentially earn high returns on their
investment. Direct Finance is a good option for businesses that need financing but
may not qualify for traditional bank loans. The company offers competitive rates and
terms, and there is no collateral required. Direct Finance is also a good option for
businesses that need funding fast – the application process is quick and easy, and
funding can be received as soon as 24 hours after approval.

What is indirect finance?

Indirect finance is when borrowers borrow funds indirectly from the financial market
(such as banks) rather than directly from investors.

One example of indirect finance

- is when a financial institution, such as a bank or credit union, works with

other companies to provide consumers with financing options for big-ticket
items like cars or houses. For example, a consumer may go to a dealership to
buy a new vehicle and apply for an auto loan through the dealership’s lending
partner. The lending partner then uses this application to determine whether
the consumer is eligible for the loan and what interest rates they will be
charged.

1. private finance:-

The private finance can be further divided into personal finance and business
finance. the personal finance is concerned with the acquisition and the proper
utilization of economic resource by the individuals and households for meeting
their different needs The business finance is also a part of private finance. the
business finance is concerned with the acquisition, management and
utilization of fund by the private business organizations. the business
organizations may also be in the form of public enterprises. but the public
enterprises fall under the category of public finance.

2. Public Finance:-

Public finance is the study of the financial aspect of the government. here we
study about the government expenditure, public revenue, public borrowing
and financial administration. The economic activities of the pubic enterprises
also fall under public finance. The objective of private of business finance is to
earn maximum return or profit. On the contrary the objective of public finance
is to maximize social welfare.

C. Types of Business  Organizations

 The type of business provided above indicates that businesses are classified
according to strategy and structure. Some examples of what entities can specialize in
include service, merchandising, or manufacturing. Service businesses provide intangible
goods such as labor, skills, and expertise. Examples include research agencies,
accounting firms, computer service providers, amusement parks, hospitals, lodging, and
engineering companies.

 As to Nature or Purpose

Nature-

The nature of business is a statement about a company’s offering to its

clients, its industry, legal structure, or any other distinctive qualities of the
business. For example, if you say a company in the “private sector”, you
evaluate the nature of the company based on its nature to earn profits. If you
say that a company is the “manufacturing sector”, you refer to a company
primarily concerned with manufacturing operations. If you refer to a company
as a “corporation”, you are qualifying the nature of the company by assessing
its legal structure. Let’s look at different categories in which you can classify
the nature of different businesses.

Examples

1. sole proprietorship, partnership, corporation, and Limited Liability

Company, or LLC.

Sole Proprietorship

The simplest and most common form of business ownership, sole

proprietorship is a business owned and run by someone for their own benefit.
The business’ existence is entirely dependent on the owner’s decisions, so
when the owner dies, so does the business.

Partnership

These come in two types: general and limited. In general partnerships, both
owners invest their money, property, labor, etc. to the business and are both
100% liable for business debts. In other words, even if you invest a little into a
general partnership, you are still potentially responsible for all its debt.
General partnerships do not require a formal agreement—partnerships can be
verbal or even implied between the two business owners.

Corporation

Corporations are, for tax purposes, separate entities and are considered a
legal person. This means, among other things, that the profits generated by a
corporation are taxed as the “personal income” of the company. Then, any
income distributed to the shareholders as dividends or profits are taxed again
as the personal income of the owners.

Limited Liability Company (LLC)

Similar to a limited partnership, an LLC provides owners with limited liability

while providing some of the income advantages of a partnership. Essentially,
the advantages of partnerships and corporations are combined in an LLC,
mitigating some of the disadvantages of each.

As  to Ownership

Business ownership can take one of three legal forms:

sole proprietorship

Partnership

corporation.