I am doing this one from my Blackberry to help you out, oosw! Thought I could squeeze this in during transport. Enjoy, Kelvin
The most important principle for an outline's form is consistency. An outline can use TOPIC or SENTENCE structure, but be consistent in form all the way through. You should begin with the main topic or idea of the essay and then proceed to show the development of its main points (See: ecow.engr.wisc.edu/cgi-bin/get/epd/155/johnson/howtooutline.doc).
Full sentence outlines are more beneficial than topic outlines because they not only impart more information to the reader, but the also help structure the essay/thesis. They are a further step in outlining, because one needs more information (and must do more research) in order to provide more details within a Full Sentence Outline.
The reason it is better to produce a full-sentence outline FIRST, rather than just delve into a paper is simply organization and structure. Each properly done paper should have an introduction, points of argument, and then a conclusion (really, just an enhancement of the 5-paragraph theme). Doing a FSO first, however, forces the author to organize and think through the topic, find what they want to say, and buttress those arguments with research. Without that outline, the essay woud likely be scatterred without much coherence. Now, does that mean one cannot vary from the outline and pursue other tracts? Of course not, but at least the outline provides the structure with which to work. In simpler terms, the FSO is the skeleton of the paper, without it, it's just mush!
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