Natalie Koebel spent much of her youth playing sports. She passed many hours on the soccer field and in the dance studio. As Natalie grew older, her passion for healthy living continued as she started practising yoga. Now, at the start of her second year in college, Natalie is investigating various possibilities for starting her own business as part of the requirements of the Entrepreneurship program she is taking. A long-time friend insists that Natalie has to somehow include healthy living in her business plan and, after a series of brainstorming sessions, Natalie settles on the idea of operating a smoothie business. She will start on a part-time basis. She will make the product at home, bottle it, and take it to the yoga studio where she exercises because they have agreed to purchase it on a regular basis. Now that she has started thinking about it, the possibilities seem endless. During the summer, she will concentrate on fresh fruit and vegetable smoothies. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on "Santé Smoothies" and then moves on to more important issues.
Instructions
(a) What form of business organization-proprietorship, partner- ship, or corporation-do you recommend that Natalie use for her business? Discuss the benefits and weaknesses of each form and give the reasons for your choice.
(b) Will Natalie need accounting information? If yes, what information will she need and why? How often will she need this information?
(c) In addition to Natalie, who do you anticipate to be the users of Natalie's accounting information? What information will these identified users need and why?
(d) Identify specific asset, liability, and equity accounts that Santé Smoothies will likely use to record its business transactions.
(e) Should Natalie open a separate bank account for the business? Why or why not?