Users of Accounting

Information
◦External Users

◦Internal Users
 Who are the External Users?
- Customers - Creditors
- Potential Investors - Government
- Academe - Public
 Who are the Internal Users?

-Management (e.g. CEO, COO,

CFO, Managers and Supervisors)
-Employees
-Stockholders
Forms of
Business
Organizations
 ◦ Sole Proprietorship
3 Forms of Business
Organizations ◦ Partnership
◦ Corporation
Sole Proprietorship
◦Are business formed by a single
individual.
◦Considered as the simplest form of
business.
Sole Proprietorship
Advantages of a Sole Proprietorship Disadvantages of a Sole
Proprietorship
Ease of formation Unlimited liability
The owner has full control of the Difficulty of raising additional capital
business
Owners can mix personal and business Owners’ bias
assets
Owners have all the profits for
themselves
Simple taxation
Partnership
◦Title IX of the Civil Code of the Philippines,
partnership is a contract whereby two or more
persons bind themselves to contribute money,
property, or industry to a common fund, with
the intention of dividing the profits among
themselves.
General Features of a Partnership

1.Separate legal existence

2.Mutual Agency
3.Unlimited liability
4.Limited life
5.Co- ownership of partnership property
6.Partnership Agreement
Partnership
Advantages of a Partnership Disadvantages of a
Partnership
Easier to create than a Unlimited liability
corporation
Better ability to acquire Mutual agency
additional capital than a sole
proprietorship
Larger pool of human capital Limited life
than sole proprietorship
Other forms of Partnership
Limited Partnership
-1 partner has unlimited liability (General Partners) and at
least one has limited liability (Limited Partner).
-LP- expose to lower level of risk.
Limited Liability Partner
- Forming a partnership for the practice of a profession
(e.g. lawyers, accountants, medical professionals, auditors)
Other forms of Partnership
Limited Liability Company
-Have features of both a corporation and a partnership.
- Owners are called “Members”.
Corporation
◦An artificial being created by
operation of law, having the right of
succession and the powers, attributes,
and properties expressly authorized by
law or incident to its existence.
General Features of a Corporation
1. Separate legal existence
2. Limited Liability
3. Transferable ownership rights
4. Virtually unlimited life
5. Corporation management
6. Government regulations
7. Double taxation
8. Dividends
Corporation
Advantages of a Corporation Disadvantages of a Corporation

Ability to acquire additional capital Heavily regulated by the

government
Transferable ownership rights Double Taxation

Limited liability Not easy to form

Virtually unlimited life More expensive to form than sole

proprietorship and partnerships
Large pool of human capital
Cooperatives
◦A duly registered association of persons, with a
common bond of interest, who have voluntarily
joined together to achieve a common social or
economic end, making equitable contributions to
the capital required and accepting a fair share of the
risks and benefits of the undertaking in accordance
with universally accepted cooperative principles.
Types of Business
According to
Activities
 ◦Service Companies
◦Merchandising Companies
◦Manufacturing Companies
Service Companies

◦Are firms that generally use their

employees to provide intangible
products or services to customers.
Merchandising Companies

◦Sell tangible
◦Buys finished or almost finished goods
from their suppliers and resells the same
to customers.
Manufacturing Companies

◦Create their own products.

◦Use raw materials, components, or
parts to produce finished goods.