FORMS OF BUSINESS

ORGANIZATION
LEARNING OBJECTIVES:

AT THE END OF THIS CHAPTER, WE WILL BE

ABLE TO:
1. DISCUSS THE DIFFERENT FORMS OF
BUSINESS ORGANIZATION;
- Do you still remember the following terms?
Give example of accounts for each term.

1.Revenues
2.Expenses
3.Assets
4.Liabilities
5.Equity
What is the primary concern why
PEOPLE want to engage in
business?
Let’s have a game, the name of the game
“Hula hula-an”. I will flash on the monitor
the features of the forms of business
organization, you will identify if it is 1. sole
or single proprietorship, 2. partnership, 3.
corporation and 4. cooperative, every
correct answer there’s a corresponding
point.
The business is owned by one
person. The capital account is
called owner’s equity.
SOLE OR SINGLE PROPRIETORSHIP
There are two or more owners in
a business.
PARTNERSHIP
This is the most complicated formed
of business organization at least five
but not more than fifteen persons
called incorporators.
CORPORATION
 It is formed by fifteen (15) or more natural
persons who are Filipino citizens, of legal age,
having common interest and actually residing
or working in the intended operation.
COOPERATIVE
What are the forms of business
organization?
 The four (4) forms of business
organization
1.Sole or single proprietorship
2.Partnership
3.Corporations
4.Cooperative
Describe each form of business
Organization.
SOLE OR SINGLE PROPRIETORSHIP
• THE BUSINESS IS OWNED BY ONE
PERSON CALLED “PROPRIETOR”.
THERE IS ONLY ONE OWNER IN A
SOLE OR SINGLE PROPRIETORSHIP
BUSINESS, THE CAPITAL ACCOUNT IS
CALLED OWNER’S EQUITY.
PARTNERSHIP
• THE BUSINESS IS OWNED BY TWO OR
MORE PERSONS CALLED “PARTNERS”
WHO AGREES AMONG THEMSELVES TO
CONTRIBUTE MONEY OR INDUSTRY
AND TO DIVIDE PROFIT IS BASED ON
THEIR AGREED PROFIT AND LOSS
• THE CAPITAL ACCOUNTS IS CALLED
“PARTNER’S EQUITY”.
Corporation
 This is the biggest and most complicated form
of business organization.
• This is formed by at least five but not more than
fifteen persons called incorporators.
• Their capital is called “Share Capital” which is
divided into units called shares.
 If there are more than a hundred of owners
which are called shareholders, their capital
account is called Shareholder’s Equity.
COOPERATIVE
 It is formed by fifteen (15) or more natural persons
who are Filipino citizen, of legal age, having a
common bond of interest and are actually residing
or working in the intended area of operation, may
organize a primary cooperative.
 The net surplus of any cooperative shall not be
construed as profit, but as an excess payment
made by the members for the loans borrowed or
the goods and services availed by them.
 The capital account called Member’s Equity.
 EXAMPLES OF BUSINESS
ORGANIZATION ACCORDING
TO THEIR FORMS
SOLE OR SINGLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
COOPERATIVE
Business Organization can also
be classified according to the
capital structure.
SOLE OR SINGLE PROPRIETORSHIP

Owner’s Equity, beginning Pxx

Add: Additional investment Pxx
Profit xx xx
Total Pxx
Less: Withdrawal xx
Owner’s Equity, End Pxx
THE CAPITAL STRUCTURE OF A PARTNERSHIP BUSINESS
FOLLOWS:

PARTNERS
A B C
PARTNER’S EQUITY, BEGINNING PXX PXX PXX
ADD: PARTNER’S SHARE IN PROFIT XX XX XX
TOTAL PXX PXX PXX
LESS: PARNER’S, DRAWING XX XX XX
PARTNER’S EQUITY, END PXX PXX PXX
 The capital structure of a corporate entity follows:
Shareholder’s Equity
Share Share Accumulated Total
Capital Premium Profit/Loss
Balance, January 1, 20B
P xx P xx P xx P xx
Add: Changes in Equity:
Issuance of Additional xx xx
share
Profit, 20B
xx xx
Less: Dividends declared
and paid ________ _______ (xx) (xx)
Balance, December 31,
20B P xx P xx P xx P xx
The Capital structure of a cooperative follows:
COOPERATIVES
Subscribed Share Capital- Ordinary P xx
Add: General Reserved Fund P xx
Cooperative Educational and Training Fund xx
Optional Fund xx
Community Development Fund xx xx
Member’s Equity, End P xx
 How does each business
organization differ in terms of
capital structure?
If you are given opportunity to
choose a business, what kind
or form will you choose? Why?
Get ½ sheet of paper, answer the
following:
• Differentiate the four (4) forms
of business organization. (5
points each)
 Prepare your personal
Statement of Changes in
Equity.