Natalie Koebel spent much of her childhood learning the art of cookie-making from her grandmother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. 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 Entrepreneur- ship program she is taking. A long-time friend insists that Natalie has to somehow include cookies in her business plan and, after a series of brainstorming sessions, Natalie settles on the idea of operating a cookie-making school. She will start on a part-time basis and offer her services in peoples’ homes. Now that she has started thinking about it, the possibilities seem endless. During the fall, she will concentrate on Christmas cookies. She will offer group sessions (which will probably be more entertainment than education for the participants) and individual lessons. Natalie also decides to include children in her target market. The first difficult decision is coming up with the perfect name for her business. In the end, she settles on “Cookie Creations” and then moves on to more important issues.

Instructions

(a) What form of business organization—proprietorship, partnership, or corporation — doyourecom- mend that Natalie use for her business? Discuss the benefits and weaknesses of each form and give the reasons for your choice.

(b) What types of information will Natalie need? Why wills here quire this information? 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) Which set of accounting standards will Natalie likely adopt when compiling her accounting information? Why?

(e) Identify specific asset, liability, and equity accounts that Cookie Creations will likely use to record its business transactions.

(f) Should Natalie open a separate bank account for the business? Why or why not?