Companies and financial accounting

Introduction

Companies and financial accounting, serves as an introduction to the understanding of the legal characteristics of limited companies and how the ways in which they are financed impact on their financial reporting and role in society.

Session 1 introduces sole proprietorships, partnerships and limited companies as three common forms of business entity and discusses the legal characteristics of the modern corporation. The corporate legal form has characteristics that make companies very different business entities from sole traders or general partnerships. Learning about these characteristics will help you understand the different perspectives of the role of companies and company financial accounting in society. Session 2 briefly describes the markets in which companies operate and looks in more detail at how limited companies raise financing through ordinary shares and loan capital. Session 3 introduces the interests of company stakeholders, and Session 4 discusses three perspectives on companies and their role in society. Finally, Session 5 compares the formats of company financial statements with those of sole traders and explains the differences.

Figure 1 The company in context

Show description|Hide description

Figure 1 shows a white rectangular form entitled ‘company’. On the left hand side is a pink rectangular form entitled ‘Markets’. It overlaps partly with the company. On the right hand side is another rectangular form entitled ‘Law’. It overlaps partly with the company. At the bottom is the final rectangular for entitled ‘Society’. It overlaps partly with the company. These indicate the company in the context of markets, the law and society.

Figure 1 The company in context

This OpenLearn course is an adapted extract from the Open University course B293 Financial accounting in context [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .