Business Organizations and Corporate Governance

The going concern assumption assumes that a business will continue to operate indefinitely. This justifies the use of historical cost and the deferral of expenses.

The entity assumption states that the financial records of a business must be kept separate from the personal records of the owner. This ensures accurate tracking of business performance.

The IASB (International Accounting Standards Board) is the independent standard-setting body responsible for developing and promoting the use of IFRS standards globally.

The Companies Act 2006 is the primary piece of legislation governing company law in the United Kingdom.

Total shares of ownership in a corporation represent capital stock, not retained earnings. Retained earnings are accumulated profits that have NOT been distributed to shareholders. The statement is false.

The Financial Accounting Standards Board (FASB) is the private, non-profit organization responsible for establishing and improving Generally Accepted Accounting Principles (GAAP) in the United States.

A sole proprietorship is owned by one person and is the simplest form of business to establish, resulting in the least amount of government regulation and simpler tax reporting compared to corporations or partnerships.

A corporation is a legal entity that is separate from its owners (shareholders). It is created under state law and provides limited liability to its owners.

A franchise is a business model where an individual pays for the right to use a parent company's name, products, and business system. John is operating a McDonald's, which is a classic example of this arrangement.

A major advantage of a corporation is limited liability, meaning shareholders are generally not personally responsible for the debts and obligations of the corporation.

A cooperative (or co-op) is a business organization owned and operated by the people who use its services or are its members, rather than by outside investors.

The Board of Directors is a group of individuals elected by shareholders to represent their interests and oversee the strategic direction and management of a corporation.

The Clayton Antitrust Act was passed to strengthen the Sherman Antitrust Act by specifically prohibiting practices that created monopolies, such as acquiring stock in competing companies.

The sole trader structure is the most common legal form for small businesses due to its simplicity, low setup costs, and ease of management.

Reasons: 
(1) Dividend is the return on share capital from the distributable profits of the company. 
(2) Based on the rate of proposed dividend company is required to transfer a certain percentage to reserves as specified. 
(3) E.g. Dividend of more than 20% of paid up capital entails a minimum of 10% of net profits to be transferred to reserves. 
(4) Company may decide to transfer more than the stipulated rates voluntarily. 
(5) Also, depreciation has to be provided for / from current / previous years profits. 
These provisions help the company to become financially sound and solid.