ACCOUNTING/FINANCE QUESTIONS
Accounting/Finance Questions
Week 1 Homework
Q1.
A sole proprietorship is, in basic terms, an enterprise owned by a single person. This essentially means that an enterprise of this nature does not have partners. One advantage of such an entity is that decision-making happens to be rather fast or quick as the number of persons to be consulted are few (i.e. in comparison to a partnership). Further, given that profits are not shared, the owner gate to keep all the profits. However, one key disadvantage is that it may be difficult to raise capital in this case. Also, the personal assets of the owner could be attached incase the business is unable to settle its obligations as there exists no distinction (for legal purposes) between the business owner and the enterprise itself.
Q2.
A financing activity could be described as any business activity or transaction that involves either the borrowing, repayment, or raising of cash. With this in mind, examples of financing activities are inclusive of, but they are not limited to; getting a bank loan, issuance of
It comes in handy in...…the operations of the enterprise. However, it should be noted that unlike a sole proprietorship, decision making on this front could be slower as shareholders may have to vote on certain key decisions.
Q2.
There are three key sections of a balance sheet. These are; the assets section, the liabilities section, and the equity section.
Q3.
The current ratio, in basic terms, happens to be one of the liquidity ratios. Thus, it comes in handy in efforts to establish whether an enterprise is capable of, or has the ability to, sort its short-term debts. It is computed by dividing the current assets figure with the…
