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May 19, 2022


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This course, Companies and financial accounting, introduces you to the legal characteristics of limited companies and how limited companies raise finance through ordinary shares and loan capital.

It also introduces the interests of company stakeholders, and looks at three different perspectives on companies and their role in society. Finally, it introduces the formats of company financial statements in comparison with those of sole traders.

This OpenLearn course is an adapted extract from the Open University course B293 Financial accounting in context.

Course learning outcomes

After studying this course, you should be able to:

  • Understand the legal characteristics of limited companies and how these characteristics are different from those of sole traders and partnerships
  • Understand company financing through share capital and loan capital
  • Understand the interests and information needs of different company stakeholders
  • Explain three different perspectives on the role of companies in society
  • Understand and reproduce company financial statement formats and explain how and why they are different from sole trader financial statements.

Course Curriculum

  • Introduction 00:10:00
  • Learning outcomes 00:10:00
    • Legal forms of business entity 00:10:00
    • Sole traders 00:15:00
    • Partnerships 00:07:00
    • Companies limited by shares 00:15:00
    • Private limited companies and public limited companies 00:20:00
    • A note on groups and holding companies 00:10:00
    • The legal characteristics of the modern corporation 00:07:00
    • Separate legal personality 00:10:00
    • Limited liability 00:07:00
    • Centralised delegated management under a board structure 00:10:00
    • Transferable and freely tradable shares 00:15:00
    • Absentee investor ownership 00:25:00
    • The market environment and sources of company finance 00:20:00
    • Sources of company finance 00:10:00
    • Equity finance (share capital) 00:35:00
    • Loan finance (debt capital or loan capital) 00:40:00
    • Primary and secondary markets 00:20:00
    • The interests and information requirements of company stakeholders 00:40:00
    • Three perspectives on the role of companies and financial reporting in society 00:25:00
    • Comparing sole trader and company financial statement formats 00:25:00
    • Sole trader financial statements 00:30:00
    • Company financial statements 00:07:00
    • Statement of financial position 00:40:00
    • Statement of financial performance 00:40:00
    • Statement of changes in equity 00:35:00
    • Statement of cash flows 00:30:00
    • Conclusion 00:05:00

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