FINANCIAL STATEMENTS OF DIFFERENT TYPES OF ORGANIZATIONS (Term Paper Sample)

FINANCIAL STATEMENTS OF DIFFERENT TYPES OF ORGANIZATIONS
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Financial Statements of Different Types of Organizations
The sole proprietorship is owned and managed by one person. The entity is the most common and oldest form of business and the easiest to form (Miller, R. & Jentz, A. 2008). Although there is only a single owner, the organization can be run by multiple employees. The sole owner is responsible for all the operations of the business, including its profits and losses (Skripak, S. 2016). In addition, the proprietor has unlimited liability, and his/her assets can be attached in case of legal suits against the business. A partnership is formed by two or more people who agree on the modalities of sharing profits and responsibilities (Lopez-Mariano, N. 1989) . The quality of communication among the partners determines its level of success (Hauser, E. 1999). There are two types of partnerships: limited and unlimited partnerships. In limited partnerships, the partners have limited liability, although one member must have unlimited liability (Friedman, E. 1996). In unlimited partnerships, the law does not distinguish between the owners' personal property and business assets. The law requires partners to clearly stipulate how profits will be divided, the decision-making process, admission of new partners, dispute resolution, buying of the partners, and dissolution of the partnership in a legally binding document (Cody, T. 2007). Additionally, the partners should decide the percentage of capital and time each person will contribute to the business.