Your friend Tim is from Darwin and he wants to start a business of his own. He is thinking of buying a
delicatessen in Sydney. The shop has been there for several years but has not been a great success. Tim
does not have sufficient savings and he may have to borrow a large amount of money to finance the
purchase.
As you are an accounting student, you have been asked to advise the following:
a. What are the options of the forms of organisation that Tim can adopt for the business? Analyse the
advantages and disadvantages of each option for Tim.
b. Will the choice of organisation affect the availability of finance for his business? Explain.
c. How can he raise the required finance? What security do you think he will need to provide?
d. How and what accounting information will assist Tim in making decisions in purchasing the business?
What non-financial information should he be requesting?
e. What skills and/or accounting knowledge will he need to manage the business?
Sample Solution
