The Role of Business in the Economy Dissertation

The Role of Business in the Eco zero(prenominal)y - Dissertation faceof Owners Type of Liability Advantages Disadvantages 1. Sole Proprietorship One Un check in the form of personal indebtedness in relation to line of work debt 1. Total profit generated is retained by the owner 2. Formation and play be easy tasks 3. Owners ar characterized by having flexibilities 1. The pecuniary liability is unlimited in nature 2. confine opportunity of financing 3. Deficiencies in counselling 4. Lacks continuity 2. Partnership More than one The business creditors are a threat to the personal as muckles held by any of the partners 1. Formation is easy 2. Can be benefited from partners having management skills which are complementary in nature 3. Financial capacity is expanded 1. Financial liability is unlimited in nature 2. Interpersonal conflicts between partners 3. Lacks continuity 4. Difficulty in dissolution 3. Corporation The no. of shareholders is unlimited. For the S Corporations it can have a maximum of 75 shareholders Limited 1. Financial liability is limited in nature 2. Management having specialized skills 3. Financial capacity is expanded 4. Large scale economical operations 1. Formation and dissolution are costly and difficult in nature. 2. Disadvantages because of taxation 3. Legal restrictions scruple 2 Define the entrepreneurship and the nature and importance in the economy of small business Entrepreneurship can be defined as the ability to develop and create something pertly. Entrepreneurship has been defined by different authors in versatile ways. For example, according to A. H. Cole, entrepreneurship is defined as an activity which is done purposefully by any individual to teach or generate profit through the manufacture and distribution of services and goods having economic value. Similarly, it is defined by Peter Drucker as a practice and not a kind of art or science. It is truly a base of knowledge, and entrepreneurship is not only a means of earning money but also a medium of creativity, imagination, flexibility, ability to undertake risks, and the ability to utilize change as a means of new opportunity (Mohanty, 2005, p.10-11). Entrepreneurship can be very advantageous for the economy of small businesses. Most of the small businesses in an economy are initiated through the efforts of a single person, who is known as the entrepreneur. They are successful in setting up the business successfully through the effective utilization of business opportunities in the market. The entrepreneurs are characterized by having the ability to take considerable amount of risks and are self motivated (NCSEE, n.d.). The small businesses set up by the entrepreneurs help to boost the economic growth and also serve for the purpose of concussion the various needs of the people locally. Question 3 Describe the basic accountability process and financial statements used in business Accounting can be defined as the process of arranging and r eporting of financial transactions after good analysis of the collected information about the business transactions. These financial transactions are required to be recorded and represented in an orderly sort so as to facilitate useful information required for the decision making process of its users. The proper interpretation of information represented in the financial statements also forms a part of the basic story process of any business entity. The information about the financial transac