Writing Resources
Question 1 Fernando and Perera would like to start a restaurant business in Colombo Knowing that you are learning accounting they approach you for suggestions as to the type of business ownership to be established Explain to them the strengths and weaknesses of partnership and limited company and provide your recommendations with supporting reasons Business ownership is very important for accounting purposes and there are three main types of business ownerships and strengths and weakness of each They are Sole proprietorship Partnership Limited Company Sole proprietorship Just as the name suggest it is a business owned by a single owner These types of businesses are much easier to set up since there are no formal procedures to be followed and most of them are small businesses Although these types of ownerships are advantageous for small businesses in service industry like the restaurant business there are some risks come with it For example in this type of ownership both the owner and the business is considered a one single entity Thus the owners personal wealth may used to cover debts incurred by the business Considering both Fernando and Perera would like to start the business together this type of ownership would not suit them as name suggest sole proprietorship is a business owned by a single owner Partnership
