Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Abe is a business owner developing a new company. He wants to have complete control over business decisions and keep all the profits, but he is also concerned about unlimited personal liability. Which type of business organization best addresses his concern about liability?

Sole proprietorship

Partnership

Corporation

General partnership

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Verified step by step guidance

Understand the key characteristics of each type of business organization mentioned in the problem: Sole proprietorship, Partnership, Corporation, and General partnership.

Sole proprietorship: This type of business is owned and operated by one individual. The owner has complete control over business decisions and keeps all profits, but they also face unlimited personal liability for business debts and obligations.

Partnership and General partnership: These involve two or more individuals sharing ownership, profits, and decision-making. However, partners typically face unlimited personal liability for the business's debts, unless structured as a limited partnership.

Corporation: A corporation is a separate legal entity from its owners (shareholders). It provides limited liability protection, meaning the owners are not personally liable for the corporation's debts. However, corporations may have more complex structures and regulations compared to sole proprietorships.

Based on Abe's concerns about unlimited personal liability and his desire to maintain control over business decisions, the corporation is the best option. It addresses his liability concerns while allowing him to structure the corporation in a way that retains control (e.g., being the sole shareholder or majority shareholder).