Types of business organization
My future speciality
My future speciality is accounting at industrial enterprises. At any industrial enterprise the book-keeping department is an independently functioning department headed by a chief book-keeper. The chief book-keeper coordinates the work of separate sectors of acountint (accounting of materials , of wages, of payments, etc.) Administratively he is responsible to the manager of the enterprise and methodologically – to the superior organization.
The main function of book-keeping department is accounting and control over all economic. Financial and production operations . The book-keeping department drawas up monthly, quarterly and annual reports on how well the enterprise has fulfilled its plans and also issues balance-shits. This is done by means of initial and subsequent checks
The drawing up of initial and subsequent checks is based on single forms used fo various branches of national economy and for different forms of property.
The initial check is made by the chief book-keeper . Subsequent control is exercised by means of month-to-month surveys of the amount of work done, of the amount of money spent out on materials for production as compared to the fixed norms, of the amount of wages paid in comparison to the wages plan.
The introduction of the journal-order system of accounting made it possible to unify drawing up balance-sheets and ease the work of accountants.
Finance and accounting
Many people view the finance and accounting functions within a business as virtually the same. Although there is a close relationship between these functions, just as there is a close relationship between finance and economics, the accounting function is best viewed as a necessary input to the finance function – that is , as a sub function of finance.
However ,there are two key differences in viewpoint between finance and accounting –one related to the treatment of funds and the other to decision making.
The accountant , whose primary function is to develop and provide data for measuring the performance of the firm , assessing its financial position and paying taxes, differs from the financial manager in the way he views the firm’s funds. The accountant , using certain standardized and generally accepted principles, prepares financial statements based on the premise that revenues should be recognized at the point of sale and expenses when they are incurred . Revenues resulting from the sale of merchandise on credit, for which the accrual system. Revenues resulting from the sale of appear on the firm’s financial statements as accountants payable , or accruals .
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The financial manager is more concerned with maintaining a firm’s solvency. By providing the cash flows necessary to satisfy its obligations and acquiring and financing the current and fixed assets needed to achieve the firms goals. Instead of recognizing revenues at the point of sale and expenses when incurred , the financial manager recognizes revenues and expenses only with respect to inflows or outflows of cash.
The duties of the financial manager differ from those of the accountant in that the accountant devotes the majority of his or her attention to the collection and presentation of financial data . The financial manager uses these data , either in raw form or after making certain adjustments and analyses, as an important input to the decision-making process. Of course . this does not mean that accountants never make decisions and financial managers never gather data; rather , the primary focuses of accounting and finance are different.
Odessa region
Odessa region is situated in the south-east of Ukraine. It borders on Romania in the south, Moldova in the west, Vinnitsa and Kirovograd regions in the north and Nikolayev region in the east.
The region is the largest in Ukraine by its area (33.3 ths. Km2) . Population numbered 2,430,033 people as of January 1, 2004.
The following are the peculiar features of Odessa region economy:
-powerful marine-based industry complex consists of 7 sea ports, dockyards and shipbuilding plants
- Powerful economic and industrial potential
- Multi-industrial agriculture
-well developed tourist, recreational, and resort infrastructure.
-encouraging investment climate the region is included into the top five most investment attractive Ukraine’s regions.
The main peculiarity of economic and geographical status of the region consists in its littoral and transboundary location. Exit to Azov and Black Sea basin and to Danube, Dniester, Dnieper, and Don determine advantages , of the region in development of transport infrastructure . Transport plays a leading role in the economy of the region. Approximately 33.5% of gross added value created in the region and almost 44% of fixed assets fall on transportation companies . This industry employs 15% of the region’s population.
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Odessa, Illyichevsk and Yuzhnyi ports are the largest Ukrainian ports at present. More than 60 mn tons of freights are annually transferred through them.
Specialized Illyichevsk fish port successfully operates on the territory of the region in addition to the mentioned universal ports. It is a subsidiary of Antarctica, the largest fishing company of Ukraine.
Odessa region is one of the most economically developed regions of Ukraine. Machine building, chemical and petrochemical industries , wood pulp and paper, food processing and light industries are developer in the region.
The top priority direction for advance development of industrial complex is development of high-tech sectors (tools making, fiber-optical manufacturing and telecommunication equipment)
All major branches of agricultural sector , starting from crop production(cereal production, sugar beet growing , floriculture , gardening, melon production, and viticulture) and up to farmer stock raising are developed in the region. Food-processing industry is rapidly developing in Odessa region.
Tourism is one of the most rapidly developing industries of the Odessa region and littoral lagoons, sand coasts and springs of mineral water have created favorable conditions for beaches , sanative resorts, holiday camps and tourist bases and help region to enter the top three leaders of recreational .
Branches of Acounting
The accounting system is central to all specialties . Each accounting speciality takes data from that system and makes a special analysis or manipulation of them to produce the information needed for its reports.
Look at cach of the branches of accounting.
I’mancial Accounting our central point in this book will be the study of this branch of accounting. Its primary function is to provide financial information to investors and other users not directly involved in the management of the organization.
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The reports from the financial accounting process are general-purpose financial statements. This statements include balance sheet , the income statement and the statement of cash flows . We will see shortly how each of these statements reports different important financial facts and results.
The financial statements are primarily designed for external audiences of which steekholders and creditors are the most important . However they are of interest to practical all audiences.
Managerial Accounting. Management makes decisions about the acquisition and use of recourses within the entity. Management must plan for and control a firm’s activities to accomplish the goals of the organization. Therefore in addition to the information shown on financial statements, management needs specific detailed data to control current operations and plan future operations.
Regulatory accounting Regulatory agencies constantly can on accountants to prepare a variety of special purpose reports. The agencies need these reports to judge whether entities are ineeting theig legal obligations and conforming to various social and economic regulations issued by federal, state, local governments .
Tax accounting This aspect of the accounting process covers the preparation of records and reports necessary for filling up specific tax returns. Most tax reporting begins with basic financial accounting data. Often , however, tax requiments call for different concepts and interpritations of those data.
Tax regulations are a complex set of ever changing laws and rules . Keep up-to date on tax regulations and their implications for business planning and decision making are critical accounting activities.
Types of business organization
The are 3 types of business organization: the sole proprietorship, the partnership and the corporation. The most economic form of business is the sole proprietorship - a business owned and run by one person. The main advantage of the sole proprietorship is that it is easiest form of business to start and run. There is almost no red type. Sole proprietors own all the profit of their enterprises and are free to make whatever changes they please. They have minimal legal restriction and do not have to pay special taxes placed on corporations. The main disadvantage is the unlimited liability that each proprietor faces. If the business fails, the owner must personally assume the debts.
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The second kind of business organization is the partnership. A partnership is a business that is jointly owned by 2 or more people, who have combined their talents and resources for the purpose of earning a profit. The most common form of partnership is a general partnership. Partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions. Limited partners are only liable for the amount they have invested. The advantage is that it is easy to form and often get tax benefits from the government. Disadvantage is unlimited financial liability.
The last kind of the business is corporation. People, who want to form a corporation must file for permission in the state where the business will have mad quarters. If approved a charter is granted. The charter states a name of the company, address purpose of the business etc. The charter specifies the number of shares or stocks.
The major advantage of the corporation is that it is the ability to acquire great financial resources. Disadvantages are that it’s difficult and expensive to organize a corporation. There is an extra tax on corporation profits. The government taxes corporate income in addition to the taxes paid by shareholders on their dividends.
Introduction into accounting
Accounting consist of the concepts and processes by which financial and economic data are gathered, processed and communicated. Accounting is a flexible discipline that requires significant exercise of judgment.
Let’s consider the relationship of accounting and the accounting system to the activities of business organization. In every organization two flows occur simultaneously .
First a firm performs the activity for which it was organized. This is generally the production of product of the delivery of service or perhaps both. Second as the product is completed or a service is delivered data are generated about this activities.
For example, a grocery store, customers purchase meat, produce and canned goods. The store business purpose is to sell these products to customers and their transfer of cash to the grocery store represent the first business activity flows.
The flow of data parallels the physical flows of merchandise and lash. The merchant uses a cash register to capture and canned goods are individually coded to each item told can be identified. In addition, the prices paid, the currency tendered by customers and the change they receive are coded at dollars and cents. This second flow of data results when the accounting system codes the transactions in letters and digits to represent the products-to-cash transfer from the first flow.
The accounting system must be ready to capture data promptly at the point of generation. Any delay in data collection increased the possibilities of inaccuracy and omission.
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