Formation and Constitution of Business Organisations
Agency, sole traders, partnerships, limited liability partnerships, companies, incorporation and company constitution.
How to study ACCA Applied Skills
Build on Applied Knowledge, use the correct UK law and tax versions, practise workplace-style digital responses and keep each independent 50% pass decision visible.
Core concepts
Concept 1
Business form determines separate personality, liability, ownership, management, continuity and filing obligations.
Exam cue: Identify the legal form before allocating asset ownership or liability.
Concept 2
Agency can bind a principal through actual or apparent authority, ratification or legal operation.
Exam cue: Test the source and scope of an agent's authority before binding the principal.
Concept 3
Incorporation creates a separate legal person governed by legislation, constitutional documents and member agreements.
Exam cue: Separate company rights from shareholder rights despite close ownership.
Risk pitfalls and guardrails
Treating shareholders as owners of company assets.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Assuming an agent's job title always creates unlimited authority.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Applying partnership rules unchanged to a registered company or LLP.
Guardrail: Do not reuse a legal rule, tax amount, reporting format, audit phrase or finance formula without checking scope, date, units and evidence.
Memory anchors
Separate Personality
An incorporated company owns its assets and incurs its liabilities separately from members.
Limited Liability
Limited liability caps a member's contribution but does not erase the company's debts.
Actual Authority
Actual authority is authority expressly or impliedly granted by the principal.
Apparent Authority
Apparent authority arises from the principal's representation to a third party.
Articles
Articles of association are the company's internal constitutional rules.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A partner orders ordinary inventory for the partnership business. When can the partnership be bound?
A principal privately limits an agent's authority, but outsiders reasonably rely on the usual authority of the role. What may bind the principal?
Answer all questions to submit.
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Continue learning
Move forward only after this module is stable.
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