會計學：企業(yè)決策的基礎（管理會計分冊）（原書第19版）課件 -AppC- Forms of Business Organization

AppendixCFormsofBusinessOrganizationImportanceofBusinessFormThelegalformofabusinessorganizationisanimportantconsiderationnotonlywhenthebusinessisfirstformedbutalsothroughoutitsoperatinglife.Theformofanenterpriseaffects:Itsabilitytoraisecapital.Therelationshipbetweentheorganizationanditsowners.Thesecurityofbothcreditors’andowners’claims.FormsofBusinessintheU.S.ThreeprimaryformsofbusinessorganizationaregenerallyfoundintheUnitedStates—soleproprietorships,partnerships,andcorporations.Corporationscarryoutthemajorityofbusinessactivity,andasaresult,thatformofbusinessorganizationistheprimaryfocusofthistextbook.Soleproprietorshipsandpartnershipsarealsoimportant,however,becausetheyrepresentthelargestnumbersofbusinessorganizationsintheUnitedStates.SoleProprietorshipsAsoleproprietorshipisanunincorporatedbusinessownedbyoneperson.Proprietorshipsarethemostcommonformofbusinessorganizationbecausetheyaresoeasytostart.Creatingasoleproprietorshiprequiresnoauthorizationfromanygovernmentalagency.Oftenthebusinessrequireslittleornoinvestmentofcapital.CommonExamplesofProprietorshipsOnasmallerscale,soleproprietorshipsmayinclude:Paperroute.Babysittingservice.Lawn-mowingbusiness.Onalargerscale,soleproprietorshipsarewidelyusedfor:Farms.Servicebusinesses.Smallretailstores.Restaurants.Professionalpractices,suchasmedicine,law,andpublicaccounting.SoleProprietorship:FinancialReportingNeedsMostsoleproprietorshipsarerelativelysmallbusinesseswithfew,ifany,financialreportingobligations.Theirneedsforaccountinginformationconsistprimarilyofdatausedindailybusinessoperations—thebalanceinthecompany’sbankaccountandtheamountsreceivableandpayable.Infact,manysoleproprietorshipsdonotprepareformalfinancialstatementsunlesssomespecialneedarises,suchasinformationtosupportbankloans.ConceptoftheSeparateBusinessEntityForaccountingpurposes,wetreateverybusinessorganization—includingasoleproprietorship—asanentityseparatefromtheotheractivitiesofitsowner.Thisenablesustomeasuretheperformanceofthebusinessseparatelyfromtheotherfinancialaffairsofitsowner.Intheeyesofthelaw,however,asoleproprietorshipisnotanentityseparatefromitsowner.Underthelaw,theproprietoristhe“entity,”andasoleproprietorshipmerelyrepresentssomeofthisindividual’sfinancialactivities.Thefactthatasoleproprietorshipanditsownerlegallyareoneandthesameexplainsmanyofthedistinctivecharacteristicsofthisformoforganization.CharacteristicsofaSoleProprietorshipEaseofformation.Businessassetsactuallybelongtotheproprietor.Thebusinesspaysnoincometaxes.Thebusinesspaysnosalarytotheowner.Theownerispersonallyliableforthedebtsofthebusiness.UnlimitedPersonalLiabilityTheownerofasoleproprietorshipispersonallyresponsibleforallofthecompany’sdebts.Abusiness“mishap,”suchaspersonalinjuriesstemmingfrombusinessoperations,mayresultinenormouspersonalliabilityforthebusinessowner.Unlimitedpersonalliabilityisthegreatestdisadvantagetothisformoforganization.KEYPOINTOtherformsofbusinessorganizationprovideownerswithsomemeansoflimitingtheirpersonalliabilityforbusinessdebts—butnotthesoleproprietorship.Ifbusinessoperationsentailariskofsubstantialliability,theownershouldconsideranotherformofbusinessorganization.AccountingPracticesofSoleProprietorshipsInthebalancesheetofasoleproprietorship,totalowner’sequityisrepresentedbythebalanceintheowner’scapitalaccount.Investmentsofassetsbytheownerarerecordedbyincreasingorcreditingthisaccount.Withdrawalsofassetsbytheownerarerecordedbydebitingtheowner’sdrawingaccount.KEYPOINTTheonlyfinancialreportingobligationofmanysoleproprietorshipsistheinformationthatmustbeincludedintheowner’spersonalincometaxreturn.Forthisreason,somesoleproprietorshipsbasetheiraccountingproceduresonincometaxrules,ratherthangenerallyacceptedaccountingprinciples.EvaluatingtheFinancialStatementsofaProprietorshipThenetincomeofasoleproprietorshipshouldbesufficienttocompensatetheownerforthefollowingfactors:Personalservicesrenderedtothebusiness.Capitalinvested.Degreeoffinancialriskthattheowneristaking.EvaluatingLiquidityThefinancialstrengthofasoleproprietormaybeaffectedbymanythingsthatdonotappearinthefinancialstatementsofthebusiness.Creditorsofasoleproprietorshipmustlookpastthebalancesheetofthebusiness.Therealissueisthedebt-payingabilityoftheowner.Creditorsofthebusinessmayasktheownertosupplypersonalfinancialinformation.Theyalsomayinvestigatetheowner’scredithistory,usingcredit-ratingagencies.AWordofCautionInChapter1,wediscussedseveralfactorsthatpromotetheintegrityofthefinancialstatementsofpubliclyownedcompanies.Amongthesesafeguardsarethe:Structureofinternalcontrol.Auditsbyindependentaccountants.Federalsecuritieslaws.Competenceandintegrityoftheprofessionalaccountants.KEYPOINTThesesafeguardsapplyprimarilytothepublicinformationdistributedbypubliclyownedcompanies.However,theyoftendonot

applytofinancialinformationprovidedbysmallbusinesses.PartnershipsApartnershipisanunincorporatedbusinessownedbytwoormorepartners.Apartnershipoftenisreferredtoasafirm.Partnershipsaretheleastcommonformofbusinessorganization,buttheyarewidelyusedforprofessionalpractices,suchas:MedicineLawPublicaccountingPartnershipsalsoareusedformanysmallbusinesses,especiallythosethatarefamily-owned.AccountingforPartnershipsForaccountingpurposes,weviewapartnershipasanentityseparatefromtheotheractivitiesofitsowners.Butunderthelaw,thepartnershipisnotseparatefromitsowners.Rather,thelawregardsthepartnersaspersonally—andjointly—responsiblefortheactivitiesofthebusiness.Theassetsofapartnershipdonotbelongtothebusiness—theybelongjointlytoallofthepartners.Unlessspecialprovisionsaremade,eachpartnerhasunlimitedpersonalliabilityforthedebtsofthebusiness.Thepartnershipitselfpaysnoincometaxes,butthepartnersincludetheirrespectivesharesofthefirm’sincomeintheirpersonalincometaxreturns.AccountingforPartnerships(cont.)Fromalegalstandpoint,partnershipshavelimitedlives.

Apartnershipendsuponthewithdrawalordeathofanexistingpartner.Admissionofanewpartnerterminatesthepreviouspartnershipandcreatesanewlegalentity.However,thisisonlyalegaldistinction.Mostpartnershipshavecontinuityofexistenceextendingbeyondtheparticipationofindividualpartners.Partnershipagreementsoftenhaveprovisionsthatmaketheretirementofpartnersandtheadmissionofnewpartnersroutineeventsthatdonotaffecttheoperationsofthebusiness.TypesofPartnershipsThetermpartnershipactuallyincludesthreedistincttypesoforganizations:Generalpartnerships.Limitedpartnerships.Limitedliabilitypartnerships.GeneralPartnershipsInageneralpartnership,eachpartnerhasrightsandresponsibilitiessimilartothoseofasoleproprietor.Eachpartnerhasmutualagency,whichisthefullauthorityofanownertonegotiatecontractsbindinguponthebusiness.Everypartneralsohasunlimitedpersonalliabilityforthedebtsofthefirm.KEYPOINTCombiningthecharacteristicsofunlimitedpersonalliabilityandmutualagencymakesageneralpartnershipapotentiallyriskyformofbusinessorganization.Example:GeneralPartnershipAssume,forexample,thatyouenterintoageneralpartnershipwithTomJones.Youagreetosplitprofitsandlosses50/50.Whileyouareonvacation,Jonescommitsthepartnershiptoacontractthatitdoesnothavetheresourcestocomplete.Yourfirm’sfailuretocompletethecontractcauseslargefinanciallossestothecustomer.Thecustomersuesyourfirmandisawardedajudgmentof$5millionbythecourt.Joneshasfewfinancialresourcesanddeclarespersonalbankruptcy.Theholderofthejudgmentagainstyourfirmcanholdyoupersonallyliableforthewhole$5million.ThefactthatyouandJonesagreedtospliteverything50/50doesnotlessenyourpersonalliabilitytothepartnership’screditors.YoumayhavealegalclaimagainstJonesforhishalfofthisdebt,butthatmaynothelpyoubecauseJonesispersonallybankrupt.LimitedPartnershipsAlimitedpartnershiphasoneormoregeneralpartnersandoneormorelimitedpartners.Thegeneralpartnersarepartnersinthetraditionalsense,withunlimitedpersonalliabilityforthedebtsofthebusinessandtherighttomakemanagerialdecisions.Thelimitedpartnersarebasicallypassiveinvestors.Theyshareintheprofitsandlossesofthebusiness,buttheydonotparticipateactivelyinmanagementandarenotpersonallyliablefordebtsofthebusiness.Ifthefirmhasfinancialtroubles,thelossesincurredbythelimitedpartnersarelimitedtotheamountstheyhaveinvestedinthebusiness.LimitedLiabilityPartnershipsInthistypeofpartnership,eachpartnerhasunlimitedpersonalliabilityforhisorherownprofessionalactivities,butnotfortheactionsofotherpartners.Unlikealimitedpartnership,allofthepartnersinalimitedliabilitypartnershipmayparticipateinmanagementofthefirm.Thistypeoffirmwascreatedtopreventlawsuitsfrombankruptinginnocentpartners.AccountingPracticesofPartnershipsInmostrespects,partnershipaccountingissimilartothatinasoleproprietorship—excepttherearemoreowners.Asaresult,aseparatecapitalaccountandaseparatedrawingaccountaremaintainedforeachpartner.Partnerships,likesoleproprietorships,recognizenosalariesexpenseforservicesprovidedtotheorganizationbythepartners.Amountspaidtopartnersarerecordedinthepartner’sdrawingaccount.BlairandCross:StatementofPartners’EquityAllocatingNetIncomeamongthePartnersAllocatingpartnershipnetincomemeanscomputingeachpartner’sshareoftotalnetincome(orloss)andcrediting(ordebiting)thisamounttothepartner’scapitalaccount.Theamountthatanindividualpartnerwithdrawsduringtheyearmaydiffersubstantiallyfromtheamountofpartnershipnetincomeallocatedtothatpartner.Allpartnerspaypersonalincometaxesontheamountofpartnershipincomeallocatedtothem—notontheamountofassetswithdrawn.Intheabsenceofprioragreement,statelawsgenerallyprovideforanequalsplitamongthepartners.Butthisseldomhappens.Partnersusuallyagreeinadvancehowthefirm’snetincomewillbeallocated.TheImportanceofaPartnershipContractEverypartnershipneedsacarefullywrittenpartnershipcontract,preparedbeforethefirmbeginsoperation.Thiscontractisanagreementamongthepartnersastotheirrightsandresponsibilities.Itspellsouttheresponsibilitiesofindividualpartners,hownetincomewillbedividedbetweenoramongthepartners,andtheamountsofassetsthatpartnersareallowedtowithdraw.Apartnershipcontractdoesnotpreventdisputesfromarisingamongthepartners,butitdoesprovideacontractualfoundationfortheirresolution.EvaluatingtheFinancialStatementsofaPartnershipThenetincomeofapartnershipissimilartothatofasoleproprietorship.Itrepresentsthepartners’compensationfor:Personalservices.Investedcapital.Assumptionoftherisksofownership.Theindividualpartnersmustseparatelyevaluatetheirrespectivesharesofthepartnershipnetincomeinlightoftheirpersonalcontributionstothefirm.Somepartnersmayfindthepartnershipquiterewarding,whileothersmayconsidertheirshareofthepartnershipnetincomeinadequate.EvaluatingPartnershipLiquidityThebalancesheetofapartnershipismoremeaningfulthanthatofasoleproprietorship.Therearelegaldistinctionsbetweenpartnershipassets,whicharejointlyowned,andthepersonalassetsofindividualpartners.Personalresponsibilityforbusinessdebtsmaynotextendtoallofthepartners.Creditorsshouldunderstandthedistinctionsamongthetypesofpartnershipsinordertobetterunderstandthepotentialliabilityofeachpartner.CorporationsAcorporationisalegalentity,havinganexistenceseparateanddistinctfromthatofitsowners.Theownersofacorporationarecalledstockholders(orshareholders),andtheirownershipisevidencedbytransferablesharesofcapitalstock.Acorporationismoredifficultandcostlytoformthanothertypesoforganizations.Thecorporationmustobtainacharterfromthestateinwhichitisformed,anditmustreceiveauthorizationfromthatstatetoissuesharesofcapitalstock.Corporations(cont.1)Asaseparatelegalentity,acorporationmayownpropertyinitsownname.Theassetsofacorporationbelongtothecorporationitself,nottothestockholders.Acorporationhaslegalstatusincourt—itmaysueandbesuedasifitwereaperson.Asalegalentity,acorporationmayenterintocontracts,isresponsibleforitsowndebts,andpaysincometaxesonitsearnings.Onadailybasis,corporationsareusuallyoperatedbysalariedprofessionalmanagers,notbytheirstockholders.Thestockholdersareprimarilyinvestors,ratherthanactiveparticipantsinthebusiness.Corporations(concluded)TheBoardofDirectorsrepresentthetoplevelofacorporation’sprofessionalmanagement.Thesedirectorsareelectedbythestockholdersandareresponsibleforhiringtheotherprofessionalmanagers.Inaddition,thedirectorsmakemajorpolicydecisions,includingtheextenttowhichprofitsofthecorporationaredistributedtostockholders.KEYPOINTThetransferabilityofcorporateownership,togetherwithprofessionalmanagement,givescorporationsagreatercontinuityofexistencethanotherformsoforganization.ComparisonofBusinessOrganizationsWhatTypesofBusinessesChoosetheCorporateFormofOrganization?Whenwethinkofcorporations,weoftenthinkoflarge,well-knowncompaniessuchasIBM,Procter&Gamble,andAT&T.Thestocksoftheselargecorporationsaretraded(boughtandsoldbyinvestors)onorganizedsecuritiesmarkets,suchastheNewYorkStockExchangeandtheNationalAssociationofSecuritiesDealersAutomatedQuotations(NASDAQ).Companieswhosesharesaretradedontheseexchangesaresaidtobepubliclyownedcorporationsbecauseanyonemaypurchasetheirstock.CloselyHeldCorporationsManysmallbusinessesareorganizedascorporations.Infact,manycorporationshaveonlyonestockholder.Corporationswhoseownershipsharesarenotpubliclytradedaresaidtobecloselyheldcorporations.AccountingforCorporateIncomeTaxesCorporateincometaxesusuallyarepayableinfourquarterlyinstallments.Ifthecompanyistoproperly“match”incometaxeswiththerelatedrevenue,incometaxexpenseshouldberecognizedintheperiodsinwhichthetaxableincomeisearned.Thisisaccomplishedbymakinganadjustingentryattheendofeachaccountingperiod.TaxableIncomeTaxableincomeiscomputedinconformitywithincometaxregulations,notgenerallyacceptedaccountingprinciples.Inthisintroductorydiscussion,wewillassumethattaxableincomeisequaltoincomebeforeincometax—asubtotalthatoftenappearsinacorporateincomestatement.Incomebeforeincometaxissimplytotalrevenuelessallexpensesotherthanincometaxexpense.Taxratesvarydependingontheamountoftaxableincome.Illustration:Smither,Inc.Toillustratetherecognitionofincometaxexpense,assumethat,inNovember,Smither,Inc.,earnsincomebeforetaxof$50,000.Themonth-endadjustingentrytorecognizetherelatedincometaxwouldbeasfollows:IncomeTaxinUnprofitablePeriodsTheadjustingentrytorecordincometaxinanunprofitableaccountingperiodconsistsofadebittoIncomeTaxPayableandacredittoIncomeTaxExpense.“Negative”incometaxexpensemeansthatthecompanyexpectstorecoverfromthegovernmentsomeoftheincometaxrecognizedasexpenseinearlierprofitableperiods.IncomeTaxinUnprofitablePeriods(cont.)Anegative(credit)balanceintheIncomeTaxExpenseaccountisoffsetagainsttheamountofthebefore-taxloss,shownasfollows:SalariesPaidtoOwnersTheownersofacorporationcannotmakewithdrawalsofcorporateassets.Manyofacorporation’semployees—perhapsthousands—mayalsobestockholders.Therefore,corporationsmakenodistinctionbetweenemployeeswhoarestockholdersandthosewhoarenot.Allsalariespaidtoemployees(includingemployee/stockholders)arerecognizedbythecorporationassalariesexpense.Owners’EquityinaCorporateBalanceSheetIneveryformofbusinessorganization,therearetwobasicsourcesofowners’equity:Investmentbytheowners.Earningsfromprofitableoperations.Statelawsrequirecorporationstodistinguishintheirbalancesheetsbetweentheamountsofequityarisingfromeachsource.Illustration:Owners’EquityToillustrate,assumethefollowing:OnJanuary4,2019,MaryFosterandseveralinvestorsstartedMary’sCabCo.,acloselyheldcorporation,byinvesting$100,000cash.Inexchange,thecorporationissuedtotheseinvestors10,000sharesofitscapitalstock.ItisnowDecember31,2021.Overitsthree-yearlife,Mary’sCabCo.hasearnedtotalnetincomeof$180,000,ofwhich$60,000hasbeendistributedtothestockholdersasdividends.TheIssuanceofCapitalStockMary’sCabCompanywouldmakethefollowingentrywhenitissued10,000sharesofcapitalstockinexchangefor$100,000cash.RetainedEarningsRetainedearningsrepresenttheowners’equitycreatedthroughprofitableoperationofthebusiness.EarningnetincomecausesthebalanceintheRetainedEarningsaccounttoincrease.IssuingdividendscausesthebalanceintheRetainedEarningsaccounttodecrease.AccountingforDividendsOnDecember1,2021,thedirectorsofMary’sCabCompanydeclaredaregularquarterlydividendof50centspershareonthe10,000sharesofoutstandingcapitalstock.ThedividendwillbepaidonDecember15tostockholdersofrecordonDecember10.Twoentriesarerequired:oneonDecember1torecordthedeclarationofthedividend,andtheotheronDecember15torecordpayment.ClosingEntriesAssumethatatJanuary1,2021,Mary’sCabCo.hadretainedearningsof$80,000.Duringtheyear,thecompanyearnednetincomeof$60,000andpaidfourquarterlydividendstotaling$20,000.TheseentriesatDecember31closetheIncomeSummaryandDividendsaccounts.StatementofRetainedEarningsCorporations:AdequacyofNetIncomeStockholders’financialriskofownershipislimitedtotheamountoftheirinvestment.Thenetincomeofacorporationrepresentssimplythereturnonthestockholders’financialinvestment.Thestockholderneedonlyask,“Isthisnetincomesufficienttocompensatemeforriskingtheamountofmyinvestment?”Thismakesitrelativelyeasyforstockholderstocomparetheprofitabilityofvariouscorporationsinmakinginvestmentdecisions.Rememberalsothatstockholdersdonotreporttheirrespectivesharesofthecorporatenetincomeintheirpersonalincometaxreturns.However,theymustpaypersonalincometaxesontheamountofanydividendsreceived.Corporations:EvaluatingLiquidityWhenextendingcredittoanunincorporatedbusiness,creditorsoftenlooktotheliquidityoftheindividualowners,ratherthanthatofthebusinessentity.Thisisbecausetheownersoftenarepersonallyliableforthebusinessdebts.Butinlendingfundstoacorporation,creditorsgenerallylookonlytothebusinessentityforrepayment.Therefore,thefinancialstrengthofthebusinessorganizationbecomesmoreimportantwhenthebusinessisorganizedasacorporation.DoubleTaxationCorporationsmustpaycorporateincometaxesontheirtaxableincome.Inaddition,thestockholdersmustpaypersonalincometaxesonthedividendstheyreceive.Asaresult,corporateearningsmayendupbeingtaxedtwice:oncetothecorporationastheincomeisearnedandthenagaintothestockholderswhentheprofitsaredistributedasdividends.SCorporationsTaxlawsallowmanysmall,closelyheldcorporationsaspecialtaxstatusunderSubchapterSofthetaxcode.CorporationsthatqualifyforthisspecialtaxtreatmentarecalledSCorporations.SCorporationstatusismostadvantageousinthefollowingsituations:Aprofitablecorporationplanstodistributemostofitsearningsasdividends.Inthiscase,organizationasanSCorporationavoidstheproblemofdoubletaxation.Anewcorporationisexpectedtoincurnetlossesinitsearlyyearsofoperation.Ordinarily,netlossesincurredbyacorporationhavenoeffectonthestockholders’personalincometaxreturns.ButifthebusinessisorganizedasanSCorporation,stockholdersmaydeducttheirshareofanynetbusinesslossintheirpersonalincometaxreturns.SelectinganAppropriateFormofBusinessOrganizationWhenstartingabusiness,theformoforganizationisanimportantconsiderationthatshouldbemadeearlyintheprocess.Amongthefactorsmostoftenconsideredare:Thepersonalliabilityoftheowner(s)forbusinessdebts.Incometaxconsiderations.Theneedtoraiselargeamountsofequitycapital.Theowners’needforflexibilityinwithdrawingassetsfromthebusiness.Whetherallownersaretohavemanagerialauthority.Theneedforcontinuityinbusinessoperations,despitefuturechangesinownership.Theeaseandcostofformingthebusiness.SupplementalTopic:PartnershipAccountingThereareanumberofuniqueaspectsofpartnershipaccounting.Inthissection,wedescribe:Openingtheaccountsofanewpartnership.Additionalinvestmentsandwithdrawalsbyowners.Allocatingpartnershipnetincomeamongthepartners.Closingtheaccountsatyear-end.OpeningtheAccountsofaNewPartnershipOnJanuary1,2021,JoanBlairandRichardCross,whooperatecompetingretailstores,decidetoformapartnershipbyconsolidatingtheirtwobusinesses.AdditionalInvestmentsAssumethataftersixmonthsofoperationthepartnershipisinneedofmorecash,andthepartnersmakeadditionalinvestmentsof$10,000eachonJuly1.ClosingtheAccountsofaPartnershipatYear-EndAssumethepartnershipearnsnetincomeof$60,000inthefirstyearofoperations.Alsoassumethatwithdrawalsduringtheyearamountedto$24,000forBlairand$16,000forCrossandneedtobeclosedatyear-end.TheIncomeStatementforaPartnershipStatementofPartners’EquityThestatementofpartners’equitypresentsanexplanationofthechangeinpartnercapitalaccountsfromoneyear-endtothenext.AllocatingPartnershipNetIncomeamongthePartnersProfitsearnedbypartnershipscompensatetheownersfor:Personalservicesrenderedtothebusiness.Capitalinvestedinthebusiness.Assumingtherisksofownership.Recognitionofthesethreefactorsishelpfulindevelopinganequitableplanforthedivisionofpartnershipprofits.Torecognizetheparticularcontributionsofeachpartnertothebusiness,partnershipprofit-and-losssharingagreementsoftenincludesalaryallowancestopartnersandinterestonthebalancesofpartners’capitalaccounts.ConsiderationsforIncomeAllocationIfonepartnerdevotesfulltimetothebusinesswhileanotherdevoteslittleornotime,thedifferenceinthepartners’contributionsoftimeandeffortshouldbereflectedintheprofit-sharingagreement.Ifonepartnerpossessesspecialskills,theprofit-sharingagreementshouldrewardthispartner’stalent.Also,partnersmayeachprovidedifferentamountsofcapitaltothebusinessentity.Again,thedifferencesinthevalueofthepartners’contributionstothebusinessshouldbereflectedintheprofit-and-losssharingagreement.TypesofIncomeAllocationPartnerscansharenetincomeorlossinanymannertheychoose;however,mostprofit-sharingagreementsfallunderoneofthefollowingtypes:Afixedra