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Chapter 1

Chapter 1 Homework.doc

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Ryerson University
ACC 100
Else Grech

Chapter 1 Homework Submitted by Group 2 P1-1A 1. Corporation - The three professors each contributed equal amounts of cash and knowledge into the business. It also says that their software looks promising, and they are concerned about the legal liabilities that the business might confront. If they form a corporation, the professors will not be personally liable for any business debts and will not have to pay personal income taxes on business earnings. 2. Proprietorship – Because Joseph opened and operates the business on his own and is not sharing anything with anyone. 3. Partnership – This business currently has two owners. Robert and Tom have combined their own businesses to form a larger one. Because they are looking to expand their business, they will need to participate in financing activities. They may decide to maintain their partnership and borrow money from a bank or other creditor. They may also decide to sell shares in their company which would transform it into a corporation. 4. Partnership – This business will be owned by three people. The marketing consulting business is a service that can be organized within this type of business organization. 5. Proprietorship – Herve wants to maintain control over his business, so a proprietorship is the best choice. However, due to his lack of funds, he would benefit from forming a partnership with someone who can contribute more economic resources to purchasing assets for the business. P1-6A One Planet Cosmetics Corp. Statement of Earnings Month Ended June 30, 2006 Revenues Service Revenue $8,000 Expenses Supplies expense $1,200 Gas and oil expense 900 Advertising expense 500 Utilities expense 300 Total expense 2,900 Earnings before income tax 5,100 Income tax expense 1,275 Net earnings $3,825 One Planet Cosmetics Corp. Statement of Retained Earnings
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