MIHAI CULEA RBT2 (new)

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RECORDING BUSINESS TRANSACTIONS MIHAI CULEA 21550944

Table of Contents PART A ............................................................................................................................... 3 STEPS TO START A BUSINESS (Carlson, 2021) ..................................................................... 4 PART B ............................................................................................................................... 5 2 ........................................................................................................................................ 7 TRIAL BALANCE ADVANTAGES (Sinra, 2018) ........................................................................ 8 TRIAL BALANCE LIMITATIONS ............................................................................................. 8 REFERENCE ........................................................................................................................ 9

PART A 1. Definition of a "one-person business" One individual makes all business decisions, handles all accounting, and keeps all of the money made from the business. This type of business is called a lone trader or sole proprietorship (SmallBusinessPro, 2019). ▪ Professional Benefits for Individual Entrepreneurs ▪ Control is a term that sums up many of the benefits. ▪ The decisions you make on a daily basis and over the long term are completely under your control. ▪ The amount of red tape and regulation is significantly less when compared with a limited liability company. ▪ Your employees are not under your supervision or paid by you. ▪ There is no hassle involved in starting a business. ▪ The confidentiality of all financial information is guaranteed. ▪ The tax return reports income and expenses, so no annual accounts are needed.

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Consequences of Being a Single-Person Enterprise Being on your own has a number of drawbacks, one of which is that people will treat you differently because you are "just" one person. • All debts are yours to pay in full. • Larger contracts could be difficult to bid on and win. • If you become hurt or sick, you won't be able to get any help because there is no staff around. • Trying to grow a company on your own can be challenging. • You have no bargaining power as a small business because of your size. • If you are lacking in skill and education, you must seek it out. When two or more people or organisations decide to run a business together, they are said to have formed a business partnership. Each partner contributes equally to the business and has an equal vote in making decisions, as well as tax liability for his or her share of the business's gains or losses (Duncan, 2022). Advantages Shared responsibilities • A combination of sources is used • Competencies have been enhanced • Support & motivation • A spread risk is involved • Trustworthiness & Assurance Disadvantages A variety of objectives • Differences of opinion

• A limited control over the situation • Contributions are unequal • Debt obligation shared by both parties 2. STEPS TO START A BUSINESS (Carlson, 2021) 1. Establish the Nature of Your Business Idea The common piece of business advise to "do what you love and make money doing it" often leaves out the necessity of the activity both being profitable and something at which you excel. 2. Scout the Market/Competition As a result, most startups fail because their founders focus too much on their goods and not enough on their rivals. If you're looking for financial backing from a third party, a possible lender or business partner will want to know what sets you apart (or your business idea). 3. Create a plan for your company's future A business plan is an evolving set of guidelines for launching a firm. Anyone, including prospective investors, financial institutions, and firm management, should have no trouble reading and comprehending this text. 4. Form a Company Organizational Structure When deciding how to organise your company, you must think about how different options will effect your tax liability, your ability to run the business as usual, and the security of your personal assets. 5. Apply for Permits and File Required Paperwork After deciding on a firm structure, numerous legal concerns must be resolved. PART B 1.

2. a)

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TRIAL BALANCE ADVANTAGES (Sinra, 2018) Facilitates the establishment of period motion, adherence to recognition principles, initial and subsequent measurement, and derecognition. Provides access to a breakdown of your account's components so you may verify that you have a sufficient cushion. Enables the evaluation of financial statement items for materiality and relative relevance. TRIAL BALANCE LIMITATIONS Noting in the daybook or other records that... Imagine that the accountant entirely forgets to enter the ledger entry. No entry would be made in the books because no monetary exchange took place. Consequently, the trial balance will not reflect this oversight. Let's say, for argument's sake, that a deal is struck with Mr. X. The bookkeeper omits a journal entry. Neither the Debtors' Register nor the Sales Register will reflect this. Accountant made a mistake in posting the transaction to the wrong account, even if the amount was correctly recorded as a debit or credit. The money paid to Mr. A, for instance, was appropriately debited to Mr. A in the daybook, but it was posted to Mr. Y's debit side account. Instead of Mr. A's balance showing up on the debit side of the trial balance, Mr. B's will be displayed. REFERENCE Carlson, R. (2021). How To Start A Business: A Step-By-Step Guide. [online] Forbes Advisor. Available at: https://www.forbes.com/advisor/business/how-to-start-a- business/. Duncan, S. (2022). The Advantages & Disadvantages Of Business Partnerships. [online] Real Business. Available at: https://realbusiness.co.uk/advantages- disadvantages-business-partnerships . Sinra (2018). 6 Limitation of Trial Balance (TB) Explained. [online] Wikiaccounting. Available at: https://www.wikiaccounting.com/5-limitation-trial-balance/. SmallBusinessPro (2019). Sole Trader Advantages and Disadvantages . [online] Smallbusinesspro.co.uk. Available at: https://www.smallbusinesspro.co.uk/small- business-finance/sole-trader.html.

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