Business Studies

Respond to the following in a minimum of 175 words. Remember to in-text cite and then reference materials where required. As a note, most of the initial response questions require demonstrated research.

Discuss the Following in a Single Initial Reply:

1) What is your understanding of finance in organizations? What exposure or experience do you have with finance?

2) What are the basic financial statements utilized in organizations?

3) All businesses in the United States (U.S.) fall under a particular business structure. What are some common forms of business structures within the U.S.?

ANSWER

Business Discussion

The role of finance in enterprises is to ensure the proper management of funds. In this case, organizations rely on finance to maximize their resources in attaining set goals and objectives. Ideally, all companies require financial information to make informed decisions regarding resources and making long-term investments. Based on my experience, finance is an essential tool in determining the current state of a business. As such, managers rely on financial reports to evaluate the effectiveness of specific strategies in promoting the organization’s growth.

The most common financial statements used in enterprises include balance sheets, income statements, statement of cash flow, and stakeholders’ equity statements. Balance sheets provide information about a company’s assets and liabilities. As such, a balance sheet reveals the organisation’s assets and the funds it owes to external parties. Businesses leverage income statements to determine their profits or losses over a specific period. In this case, income statements provide managers with a perspective of the company’s performance. Furthermore, financial statements help managers to make informed decisions that promote the company’s growth over time (Osadchy et al., 2018). Most importantly, organizations utilize financial statements to determine their return on investment.

In the United States, the most common business structures include limited liability, corporation, partnership, and sole proprietorship. Sole proprietorships provide an individual with total control over business activities (CRS), (2020). On the contrary, partnerships are owned by more than two individuals. In this case, the partners have shared control over the company’s operations. With regards to corporations, obligations and liabilities are distinct from the business owner. A limited liability enterprise incorporates the characteristics of corporations and partnerships. In this case, a limited liability company can choose to assume the tax system of a partnership or corporation.

References

Congressional Research Service (CRS), (2020). A Brief Overview of Business Types and Their Tax Treatment. https://fas.org/sgp/crs/misc/R43104.pdf

Osadchy, E. A., Akhmetshin, E. M., Amirova, E. F., Bochkareva, T. N., Gazizyanova, Y., & Yumashev, A. V. (2018). Financial statements of a company as an information base for decision-making in a transforming economy.