Question

PART 1. Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of her second year in college, Natalie is investigating various possibilities for starting her own business as part of the requirements of the entrepreneurship program in which she is enrolled. A long-time friend insists that Natalie has to somehow include cookies in her business plan. After a series of brainstorming sessions, Natalie settles on the idea of operating a cookie-making school. She will start on a part-time basis and offer her services in people's homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on holiday cookies. She will offer individual lessons and group sessions (which will probably be more entertainment than education for the participants). Natalie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on "Cookie Creations" and then moves on to more important issues. Instructions 1. List the form of business organization (proprietorship, partnership, or corporation) do you recommend that Natalie will use for her business? Discuss the advantages and disadvantages of each form and give the reasons for your choice. (5 marks) 2. Record why Natalie need accounting information? If yes, what information will she need and why? How often will she need this information? (5 marks) 3. Identify specific asset, liability, and owner's equity accounts that Cookie Creations will likely use to record its business transactions. (5 marks) 4.Find why should Natalie open a separate bank account for the business? (5 marks)

Answer 1

1) In the question Natalie , herself decided to start an entrepreneur- ship program . Hence we can conclude that the form of business organisa- tion is proprietorship or single Management. Advantages 1 Easy to start business 2.) He himself enjoy the full profit 3.) sudden decision Making 4) Less capital required to corporate Disadvantages 1) unlimited liability 2) Public sourcing of fund not possible 3) continuation is a question 4) conversion into limited liability consern is a great headache.

2) Accounting informations required are - (1) Entity concept: This helps us to understand that business is different from owner. Add (0) Money Measurement concept : This says that transactions that can be related with money terms can be recorded. (6) Periodicity concept: This concept says Financial informations are recorded and valued based on a particular period of time. say year calcing period i july to 31 March (1) matching concept: This says to match the expenses made against an income earned (1) Going concern concept: This concept I defines that business will run I for a foreseeable future:

3.) Particularily, Natalie does not requires Assets and equity capital But liability will be unlimited Assets I owners tu I liability -cookie - Not required - unlimited maker any equity - Based on - Microwave capital because the debts Stue oven she herself she face - Mixer fund the program in her business - And others 4.) Separate bank account is req- vired because cookie making is a part time job. so it is easy to have a conclusion between the main job and the part time. As per Matching concept expense io particularly expended for part time can be matched to that income.