Question

PLEASE ANSWER THE TWO QUESTIONS ASAP

Scenario: Pretend that you and three friends run a small landscaping business. You are currently structured as a general partnership and want to expand your business so that you can attract and serve new clients. You also need to purchase additional equipment to provide your services and would like to hire a part-time accountant. You recognize that you need to increase capital in order to expand; you also recognize that you may need to change your business ownership structure.

Questions:

1. Compare and contrast your options of raising capital as a general partnership vs. a corporation; in essence, discuss how owners raise the capital needed to expand under each structure.
2. Explain how organizations use accounting and financial information to make decisions.

Answer 1

1) For a general partnership options of raising capital are:

A)Explore venture Capital Funding

B)Secure a Business Loan

C)Crowd-funding the business

D)Securing small business grants

For Corporation options of raising capital are:

A) Equity

B)Debt

C)Debentures

D)Retained earnings

E)Term Loans

F)Working Capital Loans

G)Letter of credit

H)Euro Issue

I)Venture Funding etc.

In nutshell as a general partnership options are limited and even little tough nuts to execute as compared to corporations,and for general partnership they can be little informal in nature as compared to corporations.

2)Accounting and financial information helps in:

A) Assessment of solvency,liquidity and creditworthiness of a business.

B)Allocation of scarce resources in business

C)Comparison and analysis of financial health of various companies

D)Business analysis,planning,bench marking and investment choices

E)Relevant cost analysis,activity based costing techniques and make or buy analysis.