CHAPTER 1
Introduction to
Financial Statements
Chapter Outline
Study Objective 1 - Describe the Primary Forms of Business Organization
A business may be organized as a sole proprietorship, partnership, or corporation.
? Sole proprietorship - a business owned by one person
? Advantages
? simple to establish
? owner controlled
? tax advantages
? Disadvantages
? proprietor personally liable for all business debts
? financing may be difficult
? transfer of ownership may be difficult
? Partnership - a business owned by two or more people
? Advantages
? simple to establish
? shared control
? broader skills and resources
? tax advantages
? Disadvantages
? partners personally liable for all busin ...