Starting Your Own Business
Content
STARTING YOUR OWN BUSINESS
A business case presented to the Accountancy Department In partial fulfillment of the course requirements in ACTBAS1
Castillo, Angela Gabrielle R. July 21, 2010
1. Jimmy Lee might have invested on current assets such as cash and office supplies and non - current assets such as office equipment, furniture and fixtures, building and land, that can be used for the operations of his business and purchase of goods or rendering services.
2. Identify and classify the accounts affected in the following transactions: a. Cash (current asset) and service income (owner’s equity) will both increase. b. Accounts Payable (current liability), Office Equipment (non-current asset) and Furniture and Fixtures (non-current asset) will all increase. c. Cash (current asset) and Service income (from Audit fee and reimbursement of expenses incurred) (owner’s equity) both increased. d. Cash (current asset) and Unearned Service Income (current liability) will both increase. e. Cash (current asset) and drawing (owner’s equity) will both increase.
3. Jimmy Lee chose (as to ownership) Sole Proprietorship. It is suitable for him because he’s the only one who owns the business, which is a small and service-type one. The benefits of a sole proprietorship organization are as follows: - It has a sole proprietor who has complete control of the business and makes all the decisions for the business - It is easier to start a business with sole proprietorship (compared to other business organizations) since a small amount of capital will be needed - All profits will be owned by the sole proprietor
4. Jimmy Lee should convert from a sole proprietorship to a partnership. Through this, he will be able to expand into more specialized services. Also, he will have a partner who will help him out with the additional changes in his business and he will not have to do all the decisions himself. By converting into a partnership, his business will grow bigger, more people will be involved and become more successful.
5. Let’s say Jimmy was faced with financial problems and he was desperate to earn more money so he illegally changed the auditing fee of some of his clients. Pretend his clients found out and wanted to sue him. He shouldn’t run away from his dilemma since it was his fault and he should face the consequences of his actions. He would be facing dishonesty and wouldn’t have integrity, a moral conduct a business owner should have. To solve his problem, he should explain himself to his clients truthfully and tell them why he did his immoral action. He should also admit to them that what he did was wrong and unjust. He should ask them for forgiveness and tell them he will never do what he did again to earn back their trust. If ever his clients would want to either sue him or not trust his business anymore, he should accept all their decisions and face the result of his action. Lastly he should motivate himself to start a new beginning by continuing his business or better yet, creating a new one and reminding himself that he shouldn’t commit the same mistake as before by following moral ethics that a business owner should entail.
A business case presented to the Accountancy Department In partial fulfillment of the course requirements in ACTBAS1
Castillo, Angela Gabrielle R. July 21, 2010
1. Jimmy Lee might have invested on current assets such as cash and office supplies and non - current assets such as office equipment, furniture and fixtures, building and land, that can be used for the operations of his business and purchase of goods or rendering services.
2. Identify and classify the accounts affected in the following transactions: a. Cash (current asset) and service income (owner’s equity) will both increase. b. Accounts Payable (current liability), Office Equipment (non-current asset) and Furniture and Fixtures (non-current asset) will all increase. c. Cash (current asset) and Service income (from Audit fee and reimbursement of expenses incurred) (owner’s equity) both increased. d. Cash (current asset) and Unearned Service Income (current liability) will both increase. e. Cash (current asset) and drawing (owner’s equity) will both increase.
3. Jimmy Lee chose (as to ownership) Sole Proprietorship. It is suitable for him because he’s the only one who owns the business, which is a small and service-type one. The benefits of a sole proprietorship organization are as follows: - It has a sole proprietor who has complete control of the business and makes all the decisions for the business - It is easier to start a business with sole proprietorship (compared to other business organizations) since a small amount of capital will be needed - All profits will be owned by the sole proprietor
4. Jimmy Lee should convert from a sole proprietorship to a partnership. Through this, he will be able to expand into more specialized services. Also, he will have a partner who will help him out with the additional changes in his business and he will not have to do all the decisions himself. By converting into a partnership, his business will grow bigger, more people will be involved and become more successful.
5. Let’s say Jimmy was faced with financial problems and he was desperate to earn more money so he illegally changed the auditing fee of some of his clients. Pretend his clients found out and wanted to sue him. He shouldn’t run away from his dilemma since it was his fault and he should face the consequences of his actions. He would be facing dishonesty and wouldn’t have integrity, a moral conduct a business owner should have. To solve his problem, he should explain himself to his clients truthfully and tell them why he did his immoral action. He should also admit to them that what he did was wrong and unjust. He should ask them for forgiveness and tell them he will never do what he did again to earn back their trust. If ever his clients would want to either sue him or not trust his business anymore, he should accept all their decisions and face the result of his action. Lastly he should motivate himself to start a new beginning by continuing his business or better yet, creating a new one and reminding himself that he shouldn’t commit the same mistake as before by following moral ethics that a business owner should entail.
