Principles of Accounts

Types of Business Organisations

• A business can be defined as an economic or commercial activity
• All business activity can be subdivided into individual and separate transactions
• A transaction is an event that results in a change in an asset, liability, or net worth of a business
• In accounting various words are used to refer to a business these include:
  • Entity
  • Organisation
  • Concern
  • Corporation
  • Firm
  • Enterprise
  • Venture
  • Company
• It is important to note that some of these have very specific meanings
• There are different types of businesses and businesses can be divided in a number of ways
• In accounting the most important way to view businesses is by grouping them using:
  1. The ownership structure of the business
  2. The economic sector or type of the business
  3. Size
  4. Purpose