Lesson Plan 1.2–
Types and Forms of Business
Course Title – Accounting II
Lesson Title – Types and Forms of Business
TAKS: R1, W5, W6
Specific Objective – Review your students on the types of businesses,
review those forms of business learned in Accounting I and teach about Limited
Liability Corporation, Limited Liability Partnership and Non-profit Organizations.
Performance Objectives:



List and describe the three types of business: Service Business,
Merchandising Business, and Manufacturing Business
List and describe the forms of business: Sole-proprietorship, Partnership,
Corporation, Limited Liability Corporation, Limited Liability Partnership and
Non-profit Organizations.
Compare the advantages and disadvantages of the forms of business.
Preparation
Materials Needed:




Textbook
Internet
Multimedia presentation software
Smart Board or white board
Sponge/Focus Activity:
Create a word scramble for the class to view together with the words: Service
Business, Merchandising Business, Manufacturing Business, SoleProprietorship, Corporation, and Partnership. Ask your students to solve the
word scramble—students simply call out the word if they know it—one word at a
time. Give immediate feedback whether they are right or wrong. If you have it,
interactive software would be a great tool here.
Lesson Plan 1.2 –
Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Lesson Content:
TYPES of Business:

Service Businesses provide a needed service for a fee. They include travel
agencies, styling salons, movers, repair shops, real estate offices, CPAs, and
medical centers.

Merchandising Businesses buy finished products and resell them to
individuals and other businesses. They include department stores like JC
Penney, new and used car dealers, supermarkets like Kroger, drugstores,
florists, hobby shops, and Wal-Mart.
o Retailers – sell to the final user. Example: JC Penney, Kroger, Wal-Mart
o Wholesalers – sell to retailers and other wholesalers. Example: Sam’s
Club

Manufacturing Businesses buy raw materials like wood or iron ore and
transform them into finished products using labor and capital. They include
shipbuilders like Atlantic Marine Shipyard of Mobile, Alabama, Pioneer
Bakery, Dell Computer Corporation, General Motors and Kraft Foods, Inc.
FORMS of Business:
Sole-proprietorship: Only one owner


Advantages
 Easy to set up
 All profits go to owner
 Owner has total control
 Few regulations to follow
Disadvantages
 Limited expertise
 Hard to raise money
 Owner has all the risks
 Hard to attract talented employees
Partnership: Two or more owners

Advantages
 Easy to set up
 Skills and talents are pooled
 More money available
 Disadvantages
 Conflicts between partners
 Must share profits
 Owners share all the risks
Corporation: Business organization that is recognized by law to have a life of its
own.
Lesson Plan 1.2 –
Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II


Advantages
 Easier to raise money
 Easy to expand
 Easy to transfer ownership
 Losses limited to investment
Disadvantages
 Costs more to start up
 Complex to organize
 More regulations
 Higher taxes
Limited Liability Company (LLC): It is not a corporation, partnership, sole or
proprietorship. The owners are not called stockholders or partners but are called
members. It is a blend of the best characteristics of corporations, partnerships,
and sole proprietorships. It is a separate legal entity like a corporation, but it is
entitled to be treated like a partnership for tax purposes. Members do not need
to keep minutes, hold meetings, or make resolutions.


Advantages
 Simple to form
 Easy to run
 Tax advantages
 Liability protection
 Instant credibility
Disadvantages
 Conflicts on the agreement
Limited Liability Partnership: Similar to an LLC however it has no more than two
of these corporation characteristics:

Centralized management: Similar to the officers or corporate directors.

Continuity of life: A corporation has perpetual life. LLC’s are usually set up to
dissolve in 20 to 30 years because this is a corporate characteristic that is not
essential and can be circumvented by a vote of the members to continue the
LLC for an additional time period

Free transferability of interests: The owner can sell interests in the entity to
anyone without the other owners’ consent.

Limited liability: The owners are only liable for their capital contributions.
None of them are personally liable for the business debts.

Advantages



Simple to form
Easy to run
Tax advantages
Lesson Plan 1.2 –
Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II

 Liability protection
 Instant credibility
Disadvantages
 Conflicts on the agreement
Non-Profit Organization: An organization with goals other than earning a profit.
The main purpose of a non-profit organization is to provide a service for its
members or the general public not to earn a profit. They include schools,
libraries, churches, museums, professional associations, civic groups, and public
broadcasting stations.


Advantages
 Profit is not a major motive
 Can focus on the service provided
Disadvantages
 Must be sure profit is not a motive
 Tax and government regulation
 Must budget carefully
Lesson Plan 1.2 –
Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Teaching Strategies:



Have your students research the types and forms of businesses on the
Internet. Have them take notes on the information they find. (See Activity
1.2.1)
Have a class discussion in which your students share what they have
learned. Reinforce or redirect any information your students found about the
forms and types of businesses. (See Activity 1.2.1)
Have your students correct their notes where needed.
Assessment:



Presentation
Put students in groups of three; have them brainstorm about businesses in
your area and identify these types of businesses. (See Activity 1.2.2)
Have your students prepare a presentation on the Types and Forms of
Businesses. (See Activity 1.2.2)
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, First-Year
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York,
2000.
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York,
2000.
Websites:
http://www.irs.gov/businesses/small/article/0,,id=98827,00.html
http://www.llcweb.com/
Lesson Plan 1.2 –
Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity 1.2.1 – Types and Forms of Business
Course Title – Accounting II
Lesson Title– Types and Forms of Business
Lesson Objective – Students research the various types and forms of
business to get information about each.
TEKS: 130.167.c.

7.B.vi. create a clear and coherent presentation, including the use of correct
grammar, spelling, punctuation, and citation of resource materials.
 8.B. create a clear and coherent oral and written presentation that includes
the use of correct grammar, spelling, punctuation, and citation of resource
materials.
TAKS: R1, W5, W6
Preparation
Materials Needed: Computer with Internet Access
Teaching Strategies:

Give students a list of the types and forms of business
o Types
 Service Business
 Merchandising Business
 Manufacturing Business
o Forms
 Sole-Proprietorship
 Partnership
 Corporation
 LLC
 Non-Profit Organization
Activity Outline: Students research the types and forms of business and
note any information they find to share with the class. Students note the
websites they use to find the information.
Assessment:
Quality Feature
Research
Discussion with class
Notes
Websites
Activity 1.2.1 – Types and Forms of Business
Score
30
30
30
10
Total
100
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity 1.2.2 – Types and Forms of Business
Course Title – Accounting II
Session Title– Types and Forms of Business
Lesson Objective – Identify businesses in your area and what type of
business they are.
TEKS: 130.167.c.

7.B.vi.create a clear and coherent presentation, including the use of correct
grammar, spelling, punctuation, and citation of resource materials.
 8.B. create a clear and coherent oral and written presentation that includes
the use of correct grammar, spelling, punctuation, and citation of resource
materials.
TAKS: W5, W6
Preparation
Materials Needed:


Computer with multimedia presentation software
Overhead with transparency
Teaching Strategies:



Divide your students into groups of three.
Have the students prepare the multimedia presentation.
Have a spokesperson for each group share the three service, merchandising,
and manufacturing businesses their group researched with the class while
you write them on the overhead so the entire class can see.
Activity Outline: Have the student’s prepare a multimedia presentation
addressing each of the following topics:
1. Group members names
2. Service Businesses
a. What is a Service Business?
b. List at least three services businesses in your area.
3. Merchandising Businesses
a. What is a Merchandising Business?
b. List at least three merchandising businesses in your area.
4. Manufacturing Businesses
a. What is a Manufacturing Business?
b. List at least three Manufacturing Businesses in your area.
5. What is a Sole-proprietorship?
6. What is a Partnership?
7. What is a Corporation?
8. What is an LLC?
9. What is a Non-profit Organization? Include advantages and disadvantages.
10. Conclusions: What did you learn about types and forms of businesses?
Activity 1.2.2 – Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Assessment: Rubric for Multimedia Presentation
Content - Writing
All material is in publishable form; that is, it is thoroughly proof-read and without
15 careless errors.
(5=10, >10=5, >15=3)
All your information is well researched, well written, well organized and in your own
8
voice.
All flaws pointed out by the instructor and/or peer advisors in drafts have been
4
corrected.
Material shows strong understanding of major ideas and displays critical thinking in
10 placement of
text, sequencing of pages, and page composition.
3
Presentation has a title page.
40
Possible Points
Content – Technical
9
The presentation is 1 minute in length – no more, no less.
6
The presentation includes a variety of text fields, graphics, sounds and transitions.
6
6
The presentation has a professional look with an overall graphical theme that appeals
to
the audience, compliments the information, and each slide is visually neat incorporating
a
variety of layouts.
Presentation uses text, graphics, sounds transitions that communicate and compliment
information being shared.
6
The presentation visually depicts material and appeals to audience.
33
Possible Points
Communication
Did you use a different form to communicate to the group during your presentation
3 other
than simply screen reading?
3
You lead into the wealth of additional information you have on the topic.
3
You modulated your voice in addition to your visual on-screen sharing.
3
At conclusion of your sharing you checked for understanding via questions or oral quiz,
etc.
3
You utilized your allotted time effectively.
15
Possible Points
Technical Organization
4
You have made a backup copy of your presentation to assure against any disaster.
4
Each member of the audience has been given a handout of your presentation which
includes an area to take notes.
4
An electronic form of your presentation has been given to your instructor.
12
Possible Points
Activity 1.2.2 – Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity 1.2.3 – Formation, Dissolution, Liquidation
Course Title – Accounting II
Session Title– Formation, Dissolution, Liquidation
Lesson Objective – Students learn the accounting procedures related to a
partnership, then apply these procedures to a partnership formed with another
student.
TEKS: 130.167.c.:
7.B.vi. – create a clear and coherent presentation, including the use of correct
grammar, spelling, punctuation, and citation of resource materials
8.B. – create a clear and coherent oral and written presentation that includes the
use of correct grammar, spelling, punctuation, and citation of resource materials.
TAKS: W5, W6
Preparation
Materials Needed:



Textbook for reference
White board, flip charts, paper and pencil supplies
Computer with spreadsheet software
Teaching Strategies:



Students form a partnership with another student in class.
Students decide on a business name, place for the business, and describe
the activities of their business.
Students learn the accounting procedures related to a partnership, then apply
these procedures to a partnership formed with another student.
Activity Outline:
1. The partnership enters an advanced chart of accounts into the computer. This
chart of accounts should include plant assets as well as some contra
accounts.
2. The partnership enters some opening entries to get their partnership started.
This should include the entry to begin the partnership showing the cash
received for the investment. It should also demonstrate some equipment,
supplies, and prepaid insurance bought to get the business started.
3. The equipment should include advanced transactions where the partners pay
for the part of the equipment and take out loans for part of the equipment.
These transactions should be written in the narrative format, written on a
computer input form, and input in the computer.
4. At the end of the first fiscal period, one of the partners decides to take a
position with a company in the city. The teams demonstrate the "T" accounts
showing the liquidation and dissolution process of the business.
Activity 1.2.3 – Formation, Dissolution, Liquidation
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Assessment:
Rubric for Multimedia Presentation
Performance
Element
Business Plan
(10 pts.)
Partnership
Agreement
(10 pts.)
Chart of
Accounts (15
pts.)
Opening Entries
(15 pts.)
Exemplary
Partners wrote a
business plan that
included all required
details. (10 pts.)
Partners researched
and created a
partnership
agreement with all
details and that they
agreed on. (10 pts.)
Chart of accounts
contained all required
advanced accounts
and the accounts
were numbered
appropriately with
appropriate
placement.
(15 pts.)
Partners made
appropriate opening
entries. (15 pts.)
Advanced
Transactions
(20 pts.)
Partners included
advanced
transactions in the
narrative. (20 pts.)
Dissolution
Transactions
(15 pts.)
Partners analyzed
dissolution
transaction
accurately.
(15 pts.)
Liquidation
Transactions
(15 pts.)
Partners analyzed
liquidation
transactions
accurately.
(15 pts.)
Activity 1.2.3 – Formation, Dissolution, Liquidation
Acceptable
Partners analyzed
liquidation
transactions
accurately.
(15 pts.)
Partners omitted one
detail on the
partnership
agreement, and they
agreed upon the
details. (6 pts.)
Charts of accounts
contained all but one
required account.
The numbering and
placement of the
accounts contained
no errors. (11 pts.)
Partners made
appropriate opening
entries with one
exception. (11 pts.)
Partners omitted one
type of advanced
transaction in the
narrative. (14 pts.)
Partners analyzed
dissolution
transaction
accurately except
with one omission.
(11 pts.)
Partners analyzed
dissolution
transactions
accurately with one
omission. (11 pts.)
Unacceptable
Partners omitted two
or more details from
their business plan.
(0 pts.)
Partners omitted two
or more details on the
partnership
agreement and could
not agree on the
details. (0 pts.)
Chart of accounts
contained two or
more errors and the
numbering and
placement of the
accounts contained
one or more errors.
(0 pts.)
Partners had two or
more errors in the
opening entries.
(0 pts.)
Partners omitted or
more advanced
transaction in the
narrative. (0 pts.)
Partners did not
analyze dissolution
transactions
accurately. (0 pts.)
Partners did not
analyze liquidation
transactions
accurately. (0 pts.)
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity 1.2.4 – Organization of Capital Stock
Course Title – Accounting II
Session Title– Organization of Capital Stock
Lesson Objective – The student is expected to apply related accounting
procedures to the organization of capital stock.
TEKS: 130.167.c.:
7.B.vi. – create a clear and coherent presentation, including the use of correct
grammar, spelling, punctuation, and citation of resource materials
8.B. – create a clear and coherent oral and written presentation that includes the
use of correct grammar, spelling, punctuation, and citation of resource materials.
TAKS: W5, W6
Preparation
Materials Needed:



Textbook for reference
White board, flip charts, paper and pencil supplies
Computer with spreadsheet software
Teaching Strategies:
Teacher introduces unit on organization of capital stock. Discuss terminology
with students.
 Board of Directors
 Articles of Incorporation
 Charter
 Common stock
 Preferred stock
 Stock certificate
 Par value
 Par-value stock
 No-par-value stock
 Stated-value stock
 Subscribing for capital stock
 Organization costs
 Intangible assets
 Declaring a dividend
 Date of declaration
 Date of record
 Date of payment.
Activity 1.2.4 – Organization of Capital Stock
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Activity Outline:
1. Students prepare an application for permission to form a corporation. Teacher
provides this application form called Articles of Incorporation. Students must
describe the nature of a business in broad, general terms. They include name
and address of corporation.
2. Students read textbook for knowledge of kinds of stock and rights of
stockholders. In application for a charter, students specify kinds of stock
(Common and Preferred), value of stock (Par Value, No-Par Value, Stated
Value), and number of shares requested for sale to stockholders.
3. Students name directors and determine how initial capital will be obtained.
4. Students prepare a poster illustrating their corporation, the nature of
business, and kinds of stock to be offered. Students make presentation to
class presenting the poster, the article of incorporation, the charter, and a
stock certificate.
Assessment:
Rubric for Multimedia Presentation
Performance Element
Class participation in
introduction of
organization of
stock. (10 pts.)
Exemplary
Student participated in
introduction of
organization of stock by
taking notes and
asking questions.
(10 pts.)
Preparation of Articles
of
Incorporation as
means of applying for
charter for
corporation.
(30 pts.)
Student helped prepare
Articles of Incorporation
as means of applying
for charter for
corporation and
included all pertinent
requested. (30 pts.)
Specification of kinds
of stock and value of
stock in Articles of
Incorporation.
(30 pts.)
Student studied and
researched kinds of
stock and values for
stock to be included in
Articles of
Incorporation. All was
accurate. (30 pts.)
Presentation of poster
for Articles of
Incorporation,
charter, and stock
certificate. (30 pts.)
Student made
presentation to class
and included the
Articles of
Incorporation, the
approved charter, and a
stock certificate
accurately. (30 pts.)
Activity 1.2.4 – Organization of Capital Stock
Acceptable
Unacceptable
Student participated in
introduction of
organization of stock by
asking questions but did
not take notes. (7 pts.)
Student did not pay
attention to introduction
of organization of stock.
(0 pts.)
Student helped prepare
Articles of Incorporation
as
means of applying
charter for corporation
but omitted one bit of
information requested.
(23 pts.)
Student studied and
researched kinds of
stock and values for
stock to be included in
Articles of
incorporation. One
error was reported in
the submission.
(20 pts.)
Student made
presentation to
class and included the
Articles of
Incorporation, the
approved charter, and
stock certificate
but two statements
were inaccurate.
(20 pts.)
Student did no help
prepare the Articles of
Incorporation as means
of applying for
charter for corporation.
(0 pts.)
Student did not read or
research material for
kinds of stock and value
placed on
stock. (0 pts.)
Student did not
participate in
presentation to class of
Articles of Incorporation,
the
approved charter, and
the stock certificate. (0
pts.)
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
100 TOTAL POINTS POSSIBLE
Activity 1.2.2 – Types and Forms of Business
Copyright © Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II