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A Level Business > 1.2 Business Forms > Flashcards

1.2 Business Forms Flashcards

1
Q

What is the private sector made up of

A

Unincorporated and incorporated businesses

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2
Q

What is the public sector made up of

A

Government owned organisations , non-profitable (eg. NHS, schools , emergency services)

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3
Q

Two unincorporated businesses

A

Sole trader , partnership

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4
Q

Two incorporated businesses

A

Private limited company (ltd) , public limited company (plc)

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5
Q

Define privatisation

A

When the government sells a business in the private sector (sells shares)

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6
Q

Define Nationalisation

A

The government takes over a business in the private sector (buys the shares)

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7
Q

What is limited liability and its benefits

A

When the business and the business owner are two separate entities , meaning that if the business goes into debt, the business owners personal assets are not at risk.
It also means that investors are more likely to buy shares in a business as their personal assets won’t be at risk.

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8
Q

Which 2 business types have limited liability

A

Public and private limited company

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9
Q

Two business types with unlimited liability

A

Sole trader and partnership

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10
Q

5 benefits of being a sole trader

A

-flexible working hours
-own boss
-not sharing profit
-no conflict
-quicker decision making

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11
Q

7 drawbacks of being a sole trader

A

-unlimited liability
-heavy workload
-pressure of management
-pay income tax
- responsible for own investment
-limited growth
-unlikely to use economies of scale

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12
Q

7 benefits of a partnership

A

-help making decisions
-varied skill set
-shared workload
-shared management
-more capital invested
-all account record private
-instant to set up

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13
Q

7 drawbacks of a partnership

A

-reputation risk
-unlimited liability
-share profit
-disagreements
-pay income tax
-longer decision making
-responsible for partners debt

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14
Q

4 benefits of an ltd

A

-likely to be accepted for funding because public records online
-control over shareholders
-limited liability
-corporation tax rather than income tax

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15
Q

5 drawbacks of an ltd

A

-has to publicise records so competition can see data
-less capital invested from shares (than plc)
-dividends need to be paid
-conflict of shareholders
-slower decision making

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16
Q

What is a share

A

Part of the issued share capital in a company . To raise capital in order to grow

17
Q

What is an IPO (initial public offering)

A

When a business issues new shares to the public for the first time

18
Q

7 benefits of a plc

A

-limited liability
-quick growth opportunities
-corporate tax , not income tax
-more capital
-investors can easily sell shares back into stock market
-publicity gained on stock market
-likely to get funding

19
Q

7 drawbacks of a plc

A

-loss of control of share ownership
-dividend payouts
-conflict of shareholders
-share records online to competitors
-hostile takeover
-time-consuming
-obey strict rules

20
Q

What is an annual general meeting (AGM)

A

PLCs require the directors to hold an AGM to inform the shareholders on their objectives and strategy for the business

21
Q

What are the two different not-for-profit organisations

A
  1. Social enterprises (a business that aims to fix a problem)
  2. Charities (takes donations)
22
Q

Define share capital

A

The long term source of finance that is raised by selling shares

23
Q

What is equity

A

The percentage of a business that shareholders own

24
Q

What are angel investors

A

Anybody that wants a reasonable equity for a reasonable amount of money. They can have expertise or may not and they tend to invest in low risk innovative businesses. They want to make their money back in dividends

25
Q

Define Venture capital

A

Organisations that find high risk businesses to invest a million or more into businesses with high reward.they have industry expertise and are profit driven

26
Q

Factors that affect share prices

A
  • demand
  • decisions made by business leader
    -financial performance
    -state of economy
    -changes in customer interests
27
Q

What is market capitalisation and the formula

A

The value of a business determined by the price of its shares
Share price x number of shares issued

28
Q

What is divorce of ownership and control

A

Happens when the owners (shareholders) do not control the day to day decisions made in the business, instead decisions are made by the board of directors, through voting rights.

29
Q

Insolvency

A

When a business cannot meet its debt

30
Q

Liquidation

A

Turning assets into cash

A Level Business (6 decks)

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