other accounting information do not need to make assumptions about what the numbers mean. For this reason it is imperative to know and understand the eleven key concepts. | | | | | | | | ELEVEN KEY ACCOUNTING CONCEPTS Entity Accounts are kept for entities and not the people who own or run the company. Even in proprietorships and partnerships‚ the accounts for the business must be kept separate from those of the owner(s).Money-Measurement For an accounting record to be made it must
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profit disclosure. Tax rate will vary year to year depending on the net profits of the business. • Longevity is limited to the lifetime of the owner or the completed sale of the company’s tangible and intangible assets to an individual or outside entity • . If the owner dies without selling‚ the business ceases to exist. • Control is the most appealing factor for Sole Proprietorships as the owner needs only answer to themselves. The owner makes all decisions for the day to day operations
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country where the subsidiary operates‚ and the parent company still carries the foreign subsidiary’s financials on its books (consolidated financial statements). For the purposes of liability‚ taxation and regulation‚ subsidiaries are distinct legal entities. Investopedia explains ’Subsidiary’ The purchase of a controlling interest differs from a merger and the parent corporation can acquire the controlling interest with a smaller investment. Additionally‚ stockholder approval is not required in
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ii. Judicial precedent/ common law - Fundamental principles of company law which are based on judicial precedent and applicable in Malaysia‚ includes: o Case: Solomon V Solomon & Co (1897)‚ principles of separate legal entity or personality o Case: Foss V Harbottle (1843)‚ principles of Proper plaintiff and majority rule o Case: Royal British Bank V Turquand (1855)‚ principle of indoor management rule iii. Common law‚ equity and acts of England
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Joint Stock Company Company A company is an artificial person created by law‚ having a separate legal entity‚ with a perpetual succession and a common seal. It is an association of individuals for the purpose of earning profit. It has a capital divided into a number of shares‚ of which each member possesses one or more shares and which are transferable by its owners. Joint Stock Company has been defined by many eminent authors‚ jurists and institutions. Some of these definitions are
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an incorporated association. A company comes into existence on the registration under the companies Act. A joint stock company may be incorporated as a private or public company. ♦ A company formed and registered under the companies Act is a legal entity separate and distinct from its members. It may contract‚ use and be sued in its own name. It has no physical body and exists only in the eyes of law. ♦ As the life of the company is not affected by changes in the individual shareholders‚ it is said
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Sole proprietor Advantage (1) Easy to establish: Sole trading concern can be established very quickly and easily. Anybody who wants to start a business can do so‚ whenever‚ he likes. In Nepal‚ only nominal legal formality of registration is necessary. (2) Easy to dissolve: Dissolution of sole trading concern equally simple. There are no legal formalities in this regard. Proprietor can dissolve business whenever he likes to do so. (3) Effective control: In this form of business organization‚ proprietor
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Formation of Companies Introduction Associations of persons can take numerous forms. When discussing associations set up for the purpose of conducting trade‚ one considers three principle forms of partnership; partnership en nom collectiff; partnership en commandite and limited liability companies‚ with the latter being the most popular choice. A company is formed by the registration of certain documents with the Register of Companies as per article 76 (1). In instances of public or private companies
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you think? Do you think that the decision would be the same today? 2. ‘The Salomon decision was a scandalous one which unleashed a tidal wave of irresponsibility into the business community.’ Discuss. 3. When does a company become a separate legal entity? 4. What is the legal effect of incorporation of a company? 5. . Explain the significance of the “veil of incorporation”? 6. List and explain the situations in which the veil will be lifted? 7. Research the following incidents:
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outlets owned by independent operators. 5. What can happen to a business owner who has personal -Liability for their company? (0.5 points) can be held personally accountable for the financial debts and illegal actions of the company. 6. What is an entity? (0.5 points) -A being‚ such as a person or company. Lesson 3 (3.0 points) 1. Why does doing research help a company succeed? (0.5 points) -A strong understanding of the market and the competition is important to a company’s success. 2. What
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