What are the three differences in financial statements for different forms of organization?

Answer 1

The three differences in financial statements for different forms of organization are:

1. Sole proprietorship equity belongs to one owner. Partnership's equity belongs to the partners. Corporation's equity belongs to the shareholders.
2. Distributions of cash or other assets to owners of a proprietorship or partnership are referred to as withdrawals. For a corporation, this are called dividends.
3. Since the owner of a proprietorship is also the manager, no salary expense is reported on the income statement. The same goes for partnerships. With corporations, though, salaries paid to all employees, including the managers who are shareholders, are reported as expenses.