1. The study of business organization is study of complexity: as each business is different, each form of business organization is also unique. From a local hot-dog vendor to a trucking company, from a restaurant to a multinational, each business has different legal, moral and ethical concerns, and there is no one size fits-all approach to determine how a business should best be organized. Take the first two businesses, the hot dog vendor and the trucking company, as an example : assume that each business is operated by a single individual.

While one may argue that the proper form of organization for each would be a sole proprietorship, that would not be the case: the hot-dog vendor could clearly be operated as a sole proprietorship, but not the trucking company. Because of the nature of the trucking business, limiting the liability of the principals is vital: thus, the best form of organization for the trucking company would most likely be an LLC(limited liability company. Further the books of accounts prepared by different forms of organizations can also differs based on the nature of the organization.

There are six main forms of business organization, and each has very distinct advantages and disadvantages: some work best for small enterprises, some are better when outside vendors are involved, some are more suitable for larger companiesindeed , there are many variables to consider when determining the organization of a business.

Question:

1. Explain any 5 advantages and Disadvantages of sole proprietorship and Company form of organization.(10marks)
2. Mention the differences between company and sole proprietorship in terms of

1. Formation and Dissolution(2.5 marks)
2. Risk and profit(2.5marks)

3. Harees ltd, a Private company purchased a machinery on 1^st April 2001 for $ 4,75,000 and spend $ 25000 on its installation. The machinery estimated that its working life 5 years. Depreciation is provided at 10% per annum on original cost method (Straight line method) Accounts are closed on 31^st March each year. Show Machinery account for 3years.(10 marks)

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