The following describe several different business organizations. Determine whether the description refers to a sole proprietorship, partnership, or corporation.
a. Ownership of Spirit Company is divided into 1,000 shares of stock.
b. Delta is owned by Sarah Gomez, who is personally liable for the debts of the business.
c. Jo Chen and Al Fitch own Financial Services, a financial services provider. Neither Chen nor Fitch has personal responsibility for the debts of Financial Services.
d. Sung Kwon and Frank Heflin own Get-It-There, a courier service. Both are personally liable for the debts of the business.
e. XLT Services does not have separate legal existence apart from the one person who owns it.
f. BioProducts does not pay income taxes and has one owner.
g. Tampa Biz pays its own income taxes and has two owners.
Much of accounting is directed at servicing the information needs of those users that are external to an organization. Identify at least three external users of accounting information and indicate two questions they might seek to answer through their use of accounting information.
Lender- 1) Will the company be able to pay back the money borrowed? 2) Will the company make enough of a profit to pay interest on a loan provided?
Shareholders- 1) Will the company be a good business to invest in? 2) How long will the company be a good asset to have the money invested into?
Employees- 1) Does the company have fair wages? 2) Will the company be able to keep employees employed, with promotion opportunities?