Ch 1 Class Discussion.doc

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Department
Women's and Gender Studies
Course
WSTA03H3
Professor
Victoria Tahmasebi
Semester
Winter

Description
P1-2A (a) Dawn will likely operate her vegetable stand as a proprietorship because she is planning on operating it for a short time period and a proprietorship is the simplest and least costly business organization to form and dissolve. (b) Joseph and Sabra should form a corporation when they combine their operations. This is the best form of business for them to choose because they plan to raise funds in the coming year. It is easier to raise funds in a corporation. A corporation may also receive more favourable income tax treatment. (c) The professors should incorporate their business because of their concerns about the legal liabilities. A corporation is the only form of business that provides limited liability to its owners. (d) Abdur would likely form a corporation because he needs to raise funds to invest in inventories and property, plant, and equipment. He has no savings or personal assets and it is normally easier to raise funds through a corporation than through a proprietorship or partnership. (e) A partnership would be the most likely form of business for Mary, Richard and Jigme to choose. It is simpler to form than a corporation and less costly. PROBLEM 1-10A (a) (1) Cash = Total assets – (Accounts receivable + Land + Building and equipment) Cash = $85,000 – ($20,000 + $15,000 + $45,000) Cash = $5,000 (2) Total assets = Total liabilities and sh
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