Lesson: 2

Topic: Business Structures

Objectives:

During this lesson, the student will learn to differentiate between the following types of businesses:

• service
• merchandising
• manufacturing,
• non-profit organization,

In addition, the student will come to understand and be able to differentiate between the following forms of business ownership:

• sole proprietorship,
• partnership,
• corporation (or limited company), and
• cooperative.

Method of Instruction and Evaluation:

The PowerPoint entitled Exploring the Forms of Business Organization will guide a Socratic lesson in which students examine the above issues. Afterwards, students will complete the assessment exercise outlined below.

Within the course Blackboard site, under "Assignments, Unit 1: Introduction to Accounting," a Wiki has been set up entitled “Forms of Business Organization.” As a group, go into this main Wiki and set up a new Wiki (which you will link to this main Wiki). The groups will explore the following forms of business ownership:

Expectations Addressed:

The "Fundamental Accounting Practices" strand of the BAF3M Ministry of Education Curriculum Guidelines outlines all of the following specific expectations. Those expectations addressed by this lesson have been highlighted.

• Introduction to Accounting as a Discipline:
  • explain the purpose of accounting;
  • explain the difference between accounting and bookkeeping;
  • identify the users and uses of accounting;
  • identify the Generally Accepted Accounting Principles (GAAP) and explain their importance.
• Business Structures:
  • describe the characteristics of different forms of business organization, including sole proprietorship, partnership, and corporation;
  • describe the advantages and disadvantages of different forms of business organization, including sole proprietorship, partnership, and corporation;
  • explain the differences among the equity sections of different forms of business organization, including sole proprietorship, partnership, and corporation (e.g., capital account in a sole proprietorship versus common stock in shareholders’ equity in a corporation).
• The Accounting Cycle for a Service Business:
  • assess the effects that transactions have on the accounts and financial statements of a service business;
  • record transactions using the journals and ledgers of a service business;
  • prepare a trial balance and the financial statements for a service business;
  • record adjusting and closing entries for a service business (e.g., prepaid expenses, amortization, accruals);
  • describe the impact of year-end procedures, including adjusting and closing entries, on the financial statements of a service business;
  • apply the Generally Accepted Accounting Principles (GAAP) at each stage of the accounting cycle for a service business.

References:

• text, chapter #1, topic #1: pages 1-9 (required reading);
• Power Point Presentation: Exploring the Forms of Business Organization
• class notes