Types of activities performed by business organizations
Types of activities performed by business organizations
The forms of business entities can be classified according to the type of ownership of the business entity.
1. Proprietorship Firm 2. Partnership Firm 3. Company 4. LLPBusiness entities can also be grouped by the type of business activities they perform:
1. Service Entities 2. Merchandising Entities, 3. Manufacturing Entities.Any of these activities can be performed by companies using any of the four forms of business organizations.
• Service Entities perform services for a fee. This group includes accounting firms, law firms, and dry cleaning establishments. The early chapters of this text describe accounting for service companies.
• Merchandising Entities purchase goods that are ready for sale and then sell them to customers. Merchandising companies include auto dealerships, clothing stores, and supermarkets.
• Manufacturing Entities buy materials, convert them into products, and then sell the products to other entities or to the final consumers. Manufacturing Entities include steel mills, auto manufacturers, and clothing manufacturers.
All of these entities prepare “financial statements” as the final end product of their accounting process. These financial statements provide relevant financial information both to people those inside the entities —management—and to those outside the entities—creditors, stockholders, and other interested parties.
