Quiz one

1. What is the difference between economics, finance, and accounting?

There’s a very huge difference between these three concepts. The first one is a science that is concerned with three modern functions. Production, distribution and consumption of goods and services. Also, it studies how an organization make choices on allocating resources in order to maximize the profit and satisfy the need. Secondly, the concept of finance leads us to the inside of the company. It’s an important function inside the business that provides funds and capital needed to continue the activity of the firm. In the end, accounting is a system mostly related to the financial function that summarize business and financial transactions in a process of keeping financial accounts.

1. Who is the CFO? Where does this individual fit in the corporate hierarchy, and what are some of his or her responsibilities?

Nowadays, in each company we have a financial department. This department has a person that manages all the transactions and the decisions in finance and it’s called chief financial officer. This person has under its authority the accounting, the budgeting, treasury, etc.

This individual is situated in high level of hierarchy, he delegates orders to the accountants and reports to the CEO. He has to take financial decisions in order to push the company toward a financial performance.

1. What are the key differences between proprietorships, and corporations? And what is their equivalents in the Moroccan context?

Corporations and proprietorships, these are two legal concepts that refer to business entity in law. But, it exists a difference between these concepts. The first one it’s a sort of business owned by its shareholders who elect a board of directors to manage the company, and also it gives a limited liability for its owners and investors. But the second one if a form of business owned by only one individual and also know as the sole trader or the individual entrepreneurship in which there is no distinction between the owner and the business entity.

In Morocco, we can find like these companies but in different names. For the corporations we call them in Morocco sociétés de capitaux. Also, the we have the second form of the legal entity (proprietorship), and it refers to l’entreprise individuelle.

1. How are LLCs and LLPs related to other forms of organizations in American context? And what happened in this area in Morocco?

LLCs and LLPs are characterized by an organizational structure whereby the members are not personally liable for the company’s debts and liabilities which they are similar to the corporation form in American context.

1. What are some reasons the value of a business other than a small one is generally maximized when it is organized as a corporation?

In general, the corporation business has more advantages than other forms of business, such as, increasing the value of the business. The capital can be raised more easily in the sale of stock, and this provides to the company to collect more saving and have more financial sources.

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