As Level Accounting Unit 2 Revision

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Benstead Revision Notes: Types of Business Organisation: Sole Traders: Advantages:      Faster decision making Independence Quicker and cheaper to establish All profits belong to the sole trader Competitors know less about the business’s success as the accounts don’t have to be published

Disadvantages:    Unlimited liability-can lose both business’s assets and their own personal possessions. Capital is limited to the wealth of one individual. May limit business growth. Have to work long hours and have poor holidays and rewards
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  for more notes visit www.studyguide.pk May feel isolated Ownership cannot be changed Partnerships: Advantages:     More access to finance as there are more people to contribute More skills and expertise Management and responsibilities shared Workload and ideas can also be shared between partners

Disadvantages:      Unlimited liability Profits or debts shared More difficult decision making as all partners have to agree Partnerships can be short lived due to death, retirement or withdrawal More complicated, expensive and time consuming to set up than sole traders

Limited Liability companies-both PLC and LTD: Advantages:     Limited liability-owners can only lose what they invest Can raise large amounts of finance through the selling of shares Separate legal entity to owners meaning that ownership can changes Ideas and be shared

Disadvantages:    Complicated to establish-lots of legal requirements Annual accounts have to be sent to the registrar of companies People who originally establish the company can lose control as whoever owns 50+%of shares with voting rights controls the company

Accounting Concepts (BOGCRAMP):   Business Entity-only information relevant to that business must be recorded.