Essay about Week 1 Homework Assignment
Homework Assignment for Week 1:
1. Describe the field of finance. How is it different from the field of accounting?
Finance is a multifaceted field that relates to many aspects of life and business and it is beneficial to understand its impact. Knowing how finance works in different areas is crucial in budgeting investing and making your assets go far. In the text, Finance consists of three areas; corporate finance, investments and financial institutions. Corporate finance ( synonymous with business finance). Investments, which consist of financial assets like stocks, bonds; in this field you deal a lot with stock brokers as well as security or financial analysts. Financial institutions which are most commonly banks, …show more content…
A typical corporation there are two areas, stockholders and managers. Stock holders elect the board of directors who select the managers. The function of management is to run the corporations affairs in the stock holders interests. Stock holders control the corporation because they elect the directors. Because of the separation of ownership and management there are many advantages.
3. What are the three forms of business generally encountered in the US? What are the main defining characteristics of each?
The three types of business encountered in the U.S are proprietorships, partnerships and corporations. Proprietorship’s are owned by one person, is the simplest type of business to start and least regulated type of organization. There are more proprietorships than any other type of business and many go on to become corporations. In a proprietorship the owners keep all of the profit but also own all of the liability and assume all risks. Lastly, the banks and debtors can assume all personal assets of the owners because there is no difference between personal and business income as well as taxes. Proprietorships are limited to the owners lifespan and/or wealth, wealth determines the opportunities allotted to the owners. Also, a proprietorship may be difficult to transfer since it involves the sale of the business.