A business that is owned and controlled by one person is considered to be a sole trader. This form of business ownership is simple and generally inexpensive. The owner of a sole trader is entitled to make all the decisions in the organization and retain all the profits. A partnership is an organization where two or more person (partners) own and control a business. In a partnership, it is normal for each partner to have unlimited liability for debits of the business. In addition, partnerships have a limited life, and can be dissolved on the death or retirement of a partner.A corporation is a business that is organized as a separate legal entity under the law. Corporations are owned by shareholders who contribute to the capital of the business by buying shares in the corporation. The shareholders are not personally liable for(对……有责任) the debits of the corporation. In most corporations, control of the affairs of the corporation is maintained by a board of directors who are elected by shareholders.A business that is owned and controlled by one person is considered to be a sole trader. This form of business ownership is simple and generally inexpensive.一人拥有和控制的企业被称为个人独资企业。

这种企业形式比较简单，而且通常投资额较小。

The owner of a sole trader is entitled to make all the decisions in the organization and retain all the profits.个人独资企业的所有者对企业内所有的事务制定决策并拥有企业的全部利润。

A partnership is an organization where two or more person (partners) own and control a business. In a partnership, it is normal for each partner to have unlimited liability for debits of the business. In addition, partnerships have a limited life, and can be dissolved on the death or retirement of a partner.合伙企业是由两个或以上的人（合伙人）共同拥有和控制的企业组织形式。

一般在合伙企业中，每个合伙人对企业债务都承担无限责任。

同时，合伙企业的寿命也是有限的，企业可能因为某个合伙人死亡或退休而终止。

A corporation is a business that is organized as a separate legal entity under the law.公司是依照法律规定成立的独立法人组织。

Corporations are owned by shareholders who contribute to the capital of the business by buying shares in the corporation. 公司由股东拥有，股东通过购买公司的股份为公司提供资本。

The shareholders are not personally liable for the debits of the corporation. In most corporations, control of the affairs of the corporation is maintained by a board of directors who are elected by shareholders.股东个人对公司的债务不承担无限责任。

大多数公司的经营业务由股东选出的董事会实施控制。

Internal controlInternal control is essential to the efficient and effective operation of a business. All federally incorporated companies are required by the law to maintain an adequate system of inrernal control. This text describes internal control and its fundamental principles. We will also have a discussion about the impact of technology on internal control and the limitation of control procedures.Purpose of internal controlManagers of small businesses usually control the entire operation. They take part in all activities from purchasing all assets, hiring and managing employees to negotiating all contracts and singing all checks. They know from personal contact and observation whether the business is actually receiving the assets and services paid for. The larger the business, the harder managers takes close supervision. Most companies must delegate responsibilities and rely on formal procedures rather than personal contact in controlling and knowing all business activities.Managers make use of the internal control system to monitor and control business activities. An internal control system is all policies and procedures used to:1, protect asset2, ensure reliable accounting data3, give rise to the efficient operations4, encourage adherence to company policiesManagers pay great attentions to internal control system because they can keep off losses, help managers plan operations, and monitor company and employee’performance. Although internal control can reduce the company’ risk of loss, it can not provide guarantees.Principles of internal controlDifferent companies have different internal control policies and procedures, which depend on its nature and size. However, certain fundamental internal control principles apply to all companies.1, establishment of responsibilitiesProper internal control means that responsibility for a task is clearly established and assigned to one person. Where responsibility is identified, it’s not difficult to distinguish who is faulty when a problem happens in the company. For example, if two salesclerk in retail shop share the same cash register and there is a cash shortage, neither of them can be held accountable. To prevent the problem, the company can authorize one clerk to handle all cash sales, or it can use a register with separate cash drawers for each clerk.2. Maintain adequate recordsGood recordkeeping helps protect assets by ensuring that emploees use prescribed procedures. It is generally believed that reliable records are a source of information which managers use to monitor and control company activities. When detailed records of equipment are kept, for example, lost or stolen items are likely detected. Similarly, transactions are more likely to be entered in right accounts if a chart of accounts is set up and carefully used.A lot of perprinted forms and internal business papers are also designed and properly used in a good internal control system. For instance, when sales slips are prenumbered and controlled, a salesperson is not able to pocket cash by making a sale and destroying the sales slip. Computerized point-of-sale systems achieve the same control results.3, seprate recordkeeping from cutody of assetsA person who controls or has access to an asset is not responsible for keeping that asset’s accounting records. As a result, the risk of theft or waste is reduced because the person with control over the asset knows that another person keeps its records. The record-keeper does not have access to the asset and has no reason to falsify records. Two or more people must collude to steal an asset and hide the theft from the records.However, collusion is not likely because it means two or more people must agree to commit a fraud in secret.4, segregation of duties for related transactionsGood internal control segregates duties for a transaction or some relevant transactions between two or more individuals and departments. This is not a call for duplication of work but instead ensures that the work of one acts as a check on the other. We also call this principle dividing responsibility. There are a few examples to illustrate this principle. One example is requiring two signatures checks to verrify that disbursements are in conformance with policies and procedures. Another example of transactions improved by dividing redponsibility is dividing purchase transaction into placing purchase orders, receiving merchandise and paying suppliers. These tasks should be given to two or more individuals and departments. Having an independent person check incoming goods for quality and quantity encourages more care and attention to details than when checked by the person placing the order.5, physical, mechanical and electronic controlsUse of physical, mechanical and electronic controls is needed to adequately control access to, and use of assets and records. Physical controls such as safes and locked cabinets relate mainly to thesafeguarding of assets. Mechanical and electronic controls safeguard assets and enhance the accuracy and liability of the accounting records. Examples of mechanical and electronic controls are alarms to prevent break-ins, television monitors to detect theft, and program controls built in computer system to prevent errors and unauthorized access.6, perform regular and independent reviewsNo internal control system is entirely effective, for various reasons such as changes in personnel, time pressures and technological advance. We need some regular reviews to counter these factors. These reviews are done by internal auditors not directly involved in the activities. Their impartial perspective encourages an evaluation of the efficiency as well as the effectiveness of internal control system.7, other control measures(1) Insure assets and bond key employees.Good internal control means assets are adequately insured against casualty. To bond an employee is to purchase an insurance policy, or a bond, against losses from theft by that employee. Bonding reduces the risk of loss and discourages theft because bonded employees know that an independent bonding company will prosecute all employees who commit thefts.(2) apply technological controlsIt is known to all that technology usually improves the effectiveness of company control. A cash register with a locked-in tape or electronic file provides record of each cash sale. A time clock registers the exact time an employee both arrives at and leaves from the jobs. Passwords limit access to sensitive information. Currency counters can quickly and accurately count amounts. Personal identification scanners can limit access to only those individuals who are authorized. These technological controls are effective parts of internal control system.Limitation of internal controlA company ’ system of internal control is generally designed to provide reasonable assurance that resources are efficiently used, errors and irregularities are detected, assets are well safeguarded, and accounting records are reliable. That is, all internal control policies and procedures have limitations. The most serious limitations are (1) the human element and (2) the cost-benefit standard.Internal control policies and procedures are applied by people. This human element creates several potential limitations that we can categorize as either (1) human error, or (2) human fraud. Human error is a factor when internal control policies and procedures are carried out by people. It can occur from negligence, fatigue, misjudgment or confusion.Human fraud involves intent by people to defeat internal control for personal gain. This human element highlights the importance of establishing an effective internal control.Another important limitation of internal control is the cost-benefit standard. This means the costs of internal control must not exceed their benefits. Analysis of costs and benefits must consider all factors, including the impact on morale. For instance, most companies have a legal right to read employees’e-mails and listen to their voicemail. However, companies seldom exercise that right unless confronted with evidence of potential harm to the company. In consideration of all the limitations, the bottom line is that no internal control system is perfect and that managers must establish internal control policies and procedures with a net benefit to the company.。