1.2 Types of Business Entities

Question 1

what is a share in business?

Answer 1

certificate confirming part ownership of a company and entitling the shareholder to dividends

Question 2

what is a shareholder?

Answer 2

person or institution who owns shares in a company and are owners

Question 3

what are the general characteristics of privately held companies and publicly held companies?

Answer 3

1. businesses and owners are legally separate (limited liability) 2. A company is legally recognized as having an identity separate from its owners 3. there are shareholders 4. company employs people/executives to manage the business and employees to handle the day to day activities of the business. this is overseen by a board of directors.

Question 4

what are the two types of companies/corporation?

Answer 4

publicly held and privately held

Question 5

what are some disadvantages of a partnership?

Question 6

Characteristics of the public sector?

Answer 6

run and controlled by the government, funded by government, provide essential services, usually has a social purpose (benefits citizens in some ways)

Question 7

Characteristics of the private sector?

Answer 7

run and controlled by individuals, funded by individuals, provide products and services that fulfill wants and needs, focused on profit but can also have a purpose

Question 8

What type of enterprise is a sole trader?

Answer 8

for profit enterprise

Question 9

what type of enterprise is a partnership?

Answer 9

for profit enterprise

Question 10

characteristics of the public sector?

Answer 10

run and controlled by government, funded by government, provide essential services, usually has social purpose (benefits citizens)

Question 11

characteristics of private sector?

Answer 11

run and controlled by individuals, funded by individuals, provide services and products that fulfill wants and needs, focused on profit but can also have a profit

Question 12

what type of business is a privately held company?

Answer 12

For-profit enterprise

Question 13

what type of business is a publicly held company?

Answer 13

for- profit enterprise

Question 14

what type of business is a cooperative company?

Answer 14

for profit social enterprise

Question 15

what type of business is a public sector company?

Answer 15

for profit social enterprise

Question 16

what type of business is an NGO?

Answer 16

Not for profit enterprise

Question 17

what is Limited liability ?

Answer 17

investors can only lose the money they invested but not personal property or money

Question 18

what is unlimited liability?

Answer 18

investors can lose their personal property and money to help pay the debts of the company

Question 19

what is a sole trader?

Answer 19

individuals who own and run their own business but can have employees

Question 20

what are the advantages of being a sole trader?

Answer 20

one person owns it, complete control of business decision making, flexibility in terms of working, easy to set up, close contact with costumers

Question 21

disadvantages of being a sole trader?

Answer 21

unlimited liability, sources of finance limited, usually working long hours and limited vacation, lack of continuity if something happens to the owner

Question 22

what is a partnernership?

Answer 22

group of two or more people who run a business together. could be friends, associates, or people with similar skills.

Question 23

what are some advantages of a partnership?

Answer 23

partners bring different skills that help the business, partners can cover each other in case of illness or holidays, access to more finance

Question 24

what are some disadvantages of a partnership?

Answer 24

unlimited liability, must share profits, responsible for partners actions, may disagree over business decisions

Question 25

what are the two different types of companies?

Answer 25

Privately held and publicly held

Question 26

what is a shareholder?

Answer 26

person or institution that owns shared in a company and are owners

Question 27

Sole traders and partnerships what is a characteristic they share?

Answer 27

they own and run their business

Question 28

What is a privately held company?

Answer 28

business that has shareholders who are invited to buy shares by existing owners. shares are not traded on the stock market.

Question 29

advantages of a privately held company?

Answer 29

limited liability, easier to raise finance, management s shared and experts are hired

Question 30

disadvantages of a privately held company?

Answer 30

shares can’t be sold on the stock market, limited amount of shares can be sold, can be expensive to set up, more information needs to be shared with the government and published for others to see

Question 31

what is a publicly held company?

Answer 31

private sector businesses often large that sell their sales on a stock exchange. anyone is able to buy shares .

Question 32

advantages of a publicly held company?

Answer 32

limited liability, easier to raise finance, shares are sold on stock market, management is shared and experts can be hired

Question 33

disadvantages of privately held companies?

Answer 33

profits shared with shareholders via dividends, record need to be publishes annually for everyone to see, company is vulnerable to a takeover, can have communication issues due to how large the company is

Question 34

what is an IPO

Question 35

are publicly held companies and public sector companies the same?

Answer 35

no

Question 36

what is for profit social enterprise?

Answer 36

businesses that don’t solely focus on profit

Question 37

what are social enterprises?

Answer 37

focus on more than just business profit. through their business they try to improve society the environment, employ people. profit generated is also used to invest in social goals.

Question 38

what are the aims of social enterprises?

Answer 38

economic: make profit, social: provide jobs or support for local communities, environmental: protect the environment

Question 39

what is the triple bottom line?

Answer 39

the aims of social enterprises

Question 40

what is a cooperative?

Answer 40

run and owned by members. members can be employees, costumers, residents.

Question 41

advantages of a cooperative?

Answer 41

more democratic than other organizations, social aims take precedence over profit, benefits the members and local community

Question 42

disadvantages of a cooperative?

Answer 42

decision making is time consuming and difficult, difficult to raise capital, can be disagreements amongst members

Question 43

what is a non profit social enterprise?

Answer 43

organizations that don’t seek profit

Question 44

what is an NGO?

Answer 44

organization that isn’t owned and operated by the government and has a social cause.

Question 45

what are the general features of an NGO?

Answer 45

profits are not generated but surpluses are used to advance the cause of the organization, NGO´s can be political or non political, can be created for single events or long term projects, donations are very important and sometimes infrequent, ownership is unclear and can cause unclear direction of business.

Question 46

more general features of an NGO?

Answer 46

non profit enterprise, operates in the private sector of the economy and has a social cause, not operated by government, charities can be a type of NGO, run by voluntary group to promote a social cause

Question 47

advantages of an NGO?

Answer 47

benefit local communities, exempt from paying taxes, qualify for government assistance, positive impact on employees and donors

Question 48

disadvantages of an NGO?

Answer 48

strict guidelines and restrictions that non profit social enterprises must follow, depend on the goodwill of the general public and donors to fund, lack of financial and cost control as they’re not expected to earn a profit for their owners or shareholder, wages lower