ACCA F3 revision notes section A Part 1

Define financial reporting

Financial reporting is the process of recording, analysing, summarising and presenting financial data in such a manner that it may be used by all the stakeholders

 

Different types of business entities

Sole trader

Partnership

Limited liability Company

 

Sole trader

Sole trader is the business owned and managed by one person

Advantages

Keep all profits

No interference

Disadvantages

Unlimited liability

 

Partnership

Partnership is a business owned and managed by 2-20 people

Advantages

More capital

Losses are shared

Disadvantages

Profits are shared

Interference

 

Limited liability company

Limited liability company is business owned by shareholders and managed by directors

Advantages

More capital

Limited liability

Disadvantages

Legal requirements