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The accounting environment
What is a business entity?
A business is an entity that regularly enters into transactions that are expected
to provide a reward measurable in monetary terms. It is thus obvious from
everyday life that many business organisations exist. What is less obvious is that
their organisational (legal) structure and therefore their accounting requirements may
differ.
There are two main reasons for the different organisational structures that exist – the
nature of their activities and their size.
Profit-making organisations:
– sole traders (sole proprietors)
– partnerships
– limited liability companies (private and public).
Non-profit-making organisations:
– clubs and societies
– charities
– local and central government.
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