Shaheed Zulfikar Ali Bhutto Institute of Science and Technology

Islamabad

Bachelors of Business Administration

Assignment # 01

Question 1: Describe the type of businesses.

There are three types of basic businesses, i.e.

1. Sole Proprietorship:
It’s where the business is owned by a single person and they have unlimited liability upon
themselves. This means that in case of a loss the owner would have to give up their
personal property to cover the business losses.
2. Partnership:
It’s where the business is owned by two or more people, similarly to sole proprietorship,
it has unlimited liability.
3. Company based:
In accompany based business structure, the owner and the business are separated from
each other and thus has limited liabilities, where the owner isn’t held responsible in case
of business loss. There are two types of companies:
 Private: where ownership cannot be transferred and owners are usually close
friends or family.
 Public: it’s where transfer of ownership is possible. There are further two types of
public limited companies:
o Listed: Where buying and selling of stock is easier as the company is
registered on stock exchange.
o Unlisted: companies are not registered on stock exchange, hence buying and
selling of stock is not possible.
Question 2: What is accounting? Explain its types.

The purpose of accounting is to provide necessary information to decision makers to make an

appropriate decision in a business. These decision makers can be owners, lenders, managers,
employees, etc. There are three types of accounting;

1. Financial Accounting:
It is to provide information to external stakeholders such as owners, perspective
shareholders, lender, etc.
2. Managerial Accounting:
It is to provide information to internal stakeholders such as managers and employees
within the company.
3. Taxation Accounting:
This is based on functional accounting information to prepare the income tax returns
according to the requirements of the business.

Question 3: Accounting is a means to an end but not an end. Explain briefly.

Accounting is means to an end but not an end, since accounting gives you the necessary
information to make effective and efficient decision to reach the desired end. Hence accounting
is the method through which one can reach the desire end.

Question 4: Accounting is the language of business. Explain briefly.

Stakeholders need information regarding any company before deciding to invest. Similarly
managers and employees need necessary information about the business before they can make
any decision, such information is on accessible through accounting, hence we can say that
accounting is the language of business.

Question 5: What is the objective of accounting?

The primary objecting of accounting is to provide information to decision makers in any

business. Its main objective is to maintain a record of all transactions of the business and
analyzing the businesses’ financial positon.

Question 6: Define the types of stakeholders.

 I. Shareholder: They’re also owners of the business since they’re investing Capital into the
Business.
II. Lender: They provide long term loans to the business e.g. Banks.
III. Supplier: The entity from which the business purchases goods on credit.
IV. Debtor: To which the company sells goods or services on credit.
V. Labor Union: It’s a union of labor to protect the rights of the workers.
VI. Trade Associations: They’re the trade union.
VII. Government Agencies: They’re government bodies that monetize businesses i.e. SOP or
SECP.
VIII. Customers: The ones who help the business generate revenue by buying their goods.
IX. General Public: The population that live in the surrounding area of the business and can
directly or indirectly affect the reputation of the business.
X. Environment: The area in which the business operates.
XI. Managers: They’re the people who are involved in the decision makings of the business.
XII. Employees: The people involved in the day to day operations of the business.