Финансовый английский

Decide if the statement is True or False.

Proprietorship is owned by a single individual.

  • True

  • False

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Proprietorship has a single owner, called the proprietor, who often manages the business. Proprietorships tend to be small retail stores or professional businesses, such as consultants or accountants. From an accounting perspective, every proprietorship is separated from its owner: the accounting records of the proprietorship do not include the proprietor’s personal records. However, from a legal perspective, the business is the proprietor.

Partnership joins two or more individuals as co-owners. Each owner is a partner and can commit the partnership in a binding contract. This is called mutual agency. Mutual agency means that one partner can make all partners mutually liable. Many retail stores and professional organisations of consultants, attorneys and accountants are partnerships. Most partnerships are small or medium-sized, but some are gigantic, with thousands of partners. For accounting purposes, the partnership is a separate organisation, distinct from the partners.

A not-for-profit is an organisation that has been established for a religious, charitable, or educational purpose. A board, usually composed of volunteers, makes the decisions for the not-for-profit organisation. Board members have fiduciary responsibility, which is an ethical and legal obligation to perform their duties in a trustworthy manner. Their goal is to raise cash to fund their operations. Examples of not-for-profit organisations are churches and schools.