1.2 Flashcards
what is a public sector company and can you give two examples?
a company owned by the government, for example transport or electricity.
what is a private sector company?
a company not owned by the government whom aim is generally to attain profit.
what is the formula for profit?
profit=total revenu- total costs.
what is the total revenue?
the total amount of income your company brings in from selling your products/services.
what is mean by costs?
total cost represents all the costs the company incurred in.
what is a sole trader?
a person who runs and owns a business and has complete control over desitions.
what are the three factors of being a sole trader?
the sole trader owns and runs the business and control over desitions.
they have unlimited liability.
finance is usually limited.
what are the four main benefits of being a sole trader?
close to customer
privacy and limited accountability
business is quicker and easier to register
flexibility in products and hours
what are the — main disadvantages of being a sole trader?
unlimited liability
no continuation insurance in case of death or illness
limited expansion capacity
competition against more established businesses.
what is a partnership?
a business run and owned by two or more people who share responsibility and decision making.
what are the five main advantages of a partner ship?
shared responsibility (one can go on holiday)
continuation insurance incase of illness or death
more expertise with 2 people
more efficient
more access to finance as a partnership is seen as less risk than a sole trader.
what are the five disadvantages of a partner ship?
Unlimited liability per person, unless stated otherwise is a ‘deed of partner ship’.
Limited access to incase in comparison to major corporations, reducing chance of expansion.
Decisions need to be made together and no one has sole control.
profit is split.
business at risk from arguments between partners.
what are companies and corporations?
a business organisation established for specific purpose and registered with a local or national legislation.
what are the main qualities of a company or corporation?
The owner and business are legally separate and have different liabilities.
There are multiple owner that have a fraction of the company or corporation in the form of shares.
The logo is usually followed by an abbreviation that might mean different things in different countries.
The company or corporation is its own legal entity.
Share holder receive a proportion of the profit, dividends, at the discretion of the company.
Shareholders have influence in decision making, no matter the size of their shares.
When one invests in a operation or company, what are the three main rewards once can expect?
The price of the shares might increase, which will lead to an increases profit for a shareholder.
Dividends generated from the profits of the company.
Limited liability- the shareholder is not responsible for the companies debts, thy will only loose their investment money.
when one invests in a organisation, what can one expect the three main downsides to be?
price of shares might decrease.
the company can choose not to issue dividends, instead it might want to reinvest the profit.
being a share holder does not equal always have a say in the business, especially if you have a small share.
what are the five reasons a business might want to become a company?
send the signal that the business is successful.
more binational opportunity in government funding.
company and owner a seperate legal dentetise.
selling shares is a good way of financing the business.
stability in company continuation.
when a business is recognised as a company, what are the two options it can choose from to table by?
a privety held company or a publicly held company.
what is a privately held company?
a company which only sells shares within the company, to friends, family or associates. So the limit of shares is very low.
