1.2 - business ownership

Question 1

sole trader

Answer 1

someone who sets up a business on their own

Question 2

deed of partnership

Answer 2

an agreement between partners that sets out the rules of a partnership

Question 3

stock exchange

Answer 3

a market for buying or selling shares of public limited companies

Question 4

profit

Answer 4

total cost minus expense

Question 5

stakeholder

Answer 5

individuals and organisations that affect and are affected by actions of a business

Question 6

flotation

Answer 6

when a private limited company becomes a public limited company

Question 7

unlimited liability

Answer 7

a person that owns a business can have their personal possessions at risk

Question 8

limited liability

Answer 8

can loose the cost of shares but no other company debts

Question 9

company

Answer 9

a business that has its own legal identity

Question 10

partnership

Answer 10

when 2 or more people join together in a business

Question 11

shareholder

Answer 11

a person or organisation that owns part of a company

Question 12

sole trader advantages - 5

Answer 12

• your own boss
• can decide things quickly
• easy to set up
• keep all the profits
• make your own decisions

Question 13

sole trader disadvantages - 5

Answer 13

• unlimited liability
• lack finance
• not have all the skills required
• heavy workload
• difficult to take holiday

Question 14

partnership advantages - 3

Answer 14

• share workload
• more finance
• share skills

Question 15

partnership disadvantages - 3

Answer 15

• may disagree with other partners
• unlimited liability
• liable for actions of another partner

Question 16

company advantages - 4

Answer 16

• limited liability
• better status in eyes of costumers
• continues after death of founder
• can bring investors

Question 17

company disadvantages - 4

Answer 17

• have to register
• disclose information on sales and profits
• have accounts independently checked
• if there is other investors the original founder isn’t in control

Question 18

private limited company[LTD]

Answer 18

• usually has shareholders who have started the business , such as family members
• original owner in control
• shares cannot be advertised to the public
• outside investors can be offered shares in exchange for money invested

Question 19

LTD (private) advantages - 3

Answer 19

• limited liability
• customers have more confidence in status
• managers can be employed and shareholders profit

Question 20

LTD disadvantages - 3

Answer 20

• extra legal procedures that cost money
• some financial information must be published
• investors may become shareholders , reducing original owners control

Question 21

public limited company [PLC]

Answer 21

• can sell shares to general public on stoke exchange

Question 22

PLC advantages - 3

Answer 22

• have more money from advertising shares
• higher public profile on media
• shares can be tempting to investors

Question 23

PLC disadvantages - 3

Answer 23

• no control over who buys shares~ business could be taken over
• lots of legal formalities can be expensive
• owners may not have same objectives as new shareholders