Introduction it has been increasing which proves by

IntroductionIn this question, reader could come to a final conclusion by analyzing thatwhich business type more suits for a restaurant business in Colombo betweenpartnership and limited company. This is divided into 3 broad sections. In thefirst section it describes on partnership and its strengths and weaknesses.Then in 2nd paragraph it narrates on limited liability companies andits strengths and weaknesses. Third section which is more important outlinesthe recommendations to best solution.

By considering the restaurant industry inSri Lanka, it has been increasing which proves by Sri Lanka Tourism in hospitality.lkas 3.5% from October 2016 to October 2017. It was achieved mainly due to hotel companiesbut cannot neglect the contribution of sole traders and partnerships whichprovides more nature friendly experiences for visitors. So when engaging inrestaurant industry, it is significant to choose right business type forexecute vision.PartnershipAn arrangement between two or more people (max 20) with the purpose of earningprofits by continuing a business according to business partnership commandmentof 1890 in Sri Lanka. Those individuals share profits and liabilities ofbusiness venture according to agreement.

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Some partners have the right toinvolve in management decisions. Partnership Ordinance of 1890, FraudPrevention Ordinance of 1840 no 7, 2007 no 7 Company Act, Business NamesOrdinance 1918 no 6 and 1907 Limited Partnership Commandment are the lawsaffecting to partnership in Sri Lanka. Special characteristics of partnershipsare there is a business and agreement, arrangement to profit sharing and mutualagency.Strengths of partnerships are easy to start, one partner can invest a lowcapital, loss is shared, profit is shared among few people, legislations impactis low, taking collective decisions and not essential for accounting andauditing. Weaknesses are unlimited liability, less continuity, no legalpersonality, difficult to disband, no confide, risk is high, time taken to takedecisions, conflicts among partners could affect to business.Limited CompanyThis is the business form that has legal personality, liability of shareholderslimited only for the capital they have invested and having perpetual successioncapacity. Company Act 2007 no 7 is the legislation in Sri Lanka for companies.

Management of the company is done by a director board and for those positions,talented employees could be recruited whom are not owners, is a specialcharacter of limited company.Strengths are having legal personality which business can represent as independententity, limited liability that investors only liable to his capital not has tosacrifice personal assets, perpetual succession capacity is there which iscontinuity, can transfer shares, can gain huge capital, there might be taxadvantage, can recruit highly talented human resources, can achieve macroturnover benefits because of macro investment. Weaknesses are costs ofestablishing the company is high, having a complex process for registration,legislation impact is high, management is complicated, loss is confluence inthe company, small shareholders have a disadvantage as voting rights are varyaccording to share owners.RecommendationsStarting a restaurant in Colombo and competing with reputed brands like Hilton,Cinnamon, Galle Face Hotel, Jetwing Hotels, Aitken Spence, Amaya Hotels, JohnKeells hotels etc.

. always challenging. So it should be differentiated and forFernando, Perera-it is more beneficial to start as a partnership. Because theycan start with a small capital. If need more investment, can invite somefriends to join with them. Starting will be simple rather than complicatedwhich limited company could lead to exhaustion from beginning.

If they do nothave accounting knowledge, it will not be an issue as accounting and auditingnot compulsory in partnership. Costs for formation will be low. When friendsare in partnership, there will not be much conflicts and it will lead to takequick right decisions. When starting a business there will be losses up to someperiod though it can bear by partners.

Coercion of laws and regulations arepretty low than a company. With the bond issue problem in Central Bank of Sri Lanka(CBSL), investors not interesting for a company and due to that bank loan rateshave been increased drastically so it is not a good time for loans as well.Therefore more productive to start as a partnership with a small capital.ConclusionEnd of the day, it is easy to decide that partnership is having simplestructure which suits to restaurant than a complex circumstances of a company.

After stability of the business then they can come to decision where to launchnext level like widening to a company. That is what ODEL did (great clothingbusiness in Sri Lanka- previously it was a partnership now it is a company). Bydifferentiated as providing Sri Lankan traditional village life experienceinstead those luxury experience in skyscrapers will make a great calmness inhectic Colombo for visitors as a partnership business.Q2.IntroductionIn this essay, has to identify the differences between Financial Accounting andManagement Accounting. In the first 3 paragraphs it includes explanation ofAccounting, Financial Accounting (FA) and Management Accounting (MA)respectively. Then describes the differences between FA and MA. Main purpose isto recognize differences and elaborate them deeply.

AccountingAccounting is a formal process of cognizing, recording, serving, categorizing,verifying, summarizing, interpreting and communicating financial information tousers for decision making purpose. Users are stakeholders whom owners,creditors, managers, employees, competitors, government, professional bodies,media, public, investors and customers. It unveils profits or loss for aperiod, worth and situation of the business’s assets, liabilities, equity.According to necessity of stakeholders it is divided into 2 categories as FAand MA.Financial Accounting (FA) FA is the branch that specializing on keeping a summarized track record offinancial transactions based on historical data preserving in financialstatements which income statement or a balance sheet.

It has common rules andaccounting standards known as Generally Accepted Accounting Principles (GAAP)as it deals with outside parties.Management Accounting (MA)According to cimaglobal.lk MA induce and preserve worth for organizations bysourcing, analyzing, communicating and using it for relevant decision makersthrough financial and non-financial information. It helps managers to takedecisions, reduce risk and fulfill business strategy.Differences between FA and MAThroughout this discussion, differences between FA and MA is considered. FAreports information to internal and especially for outside parties whom arestakeholders. Outsiders are customers, suppliers, competitors, potentialinvestors, producers of substitute goods, media and special interest groups.Stakeholders get information by Income Statements, Balance Sheet, Changes inEquity sheet etc… which are published quarterly or annually.

On the other handMA only deals with inside parties like owners, managers, employees etc… Theytake decisions based on manufacturing accounts, stock controlling accounts,overhead costing, cost volume profit, budgeting etc… Those accounts are notpublished and some data are confidential only reserved for owners and managers.2nd difference is that FA only uses historical financial data tomake financial reports. Those data are recorded in special books (cash, bank statementsand petty cash) and then trial balance next at last financial statements areprepared. But in MA, historical, current predicted future financial andnon-financial data is considered. MA also could be concern as part of helping businessstrategy too as some accounts (Cash Budgets) are prepared based on predictions.If the Christmas season coming up, you have to increase production.

Based onthat MA is prepared. 3rd difference for consideration is FA make onquarterly or annually while MA is prepared often on daily or weekly basis. FAnormally published after a year to understand progress of the organization.

Although MA recognizes accounts for shorter periods to come to a conclusion andtake quick decisions in various sections of the organization. ConclusionIn the above descriptions clearly cognized differences between FA and MA. Eventhough relevance and reliability is high in FA, MA information should be consideredas highly relevance and reliable which could lead to take correct decisions.Also MA should concern as highly regulated like FA by organizations because it convincetransparency. As accounting purpose is to take decisions, both FA and MA shouldbe treated equally to take right decisions.

MA helps to organization’s overallpicture which is FA statements betterment.Referencing

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