1.2 Types of Business Entities

Question 1

Private sector

Answer 1

The portion of an economy not owned or directed by the government.

Question 2

Multinational company

Answer 2

A company that operates in at least two countries, one of which is not the company’s home country.

Question 3

Price

Answer 3

The amount of money that a business charges for its product or service.

Question 4

Profit

Answer 4

Total revenue minus total costs.

Question 4

Public sector

Answer 4

The portion of the economy controlled or owned by the government.

Question 5

Tax

Answer 5

A payment by individuals or businesses to the government.

Question 6

For profit commercial enterprise

Answer 6

A type of business that earns profits, which are distributed to owners or shareholders; profits may have prioritity over other objectives.

Question 7

Unlimited liability

Answer 7

A situation where the owners of a business are personally responsible for all the debts of the business if it fails; the owners and the business are not legally separated.

Question 7

Sole trader

Answer 7

A business owned and run by one person; there is no legal separation between the owner and the business.

Question 8

Partnership

Answer 8

A business owned and run by two or more people who share the responsibility for the business and the profits; there is no legal separation between the business and the owners.

Question 9

Company

Answer 9

A business owned by multiple shareholders who have limited liability; can be privately held or publicly held.

Question 10

Shareholders

Answer 10

Someone who owns part of a business.

Question 11

Dividends

Answer 11

A portion of a business’s profits distributed to the owners/shareholders.

Question 12

Limited liability

Answer 12

A situation where the owners of a business are not personally responsible for the debts of the business if it fails; the owners and the business are legally separated.

Question 13

Privately held company

Answer 13

A company that is privately owned and often has family or friends as the shareholders; the shares are not sold to the wider public and are not traded on a stock exchange.

Question 14

Publicly held company

Answer 14

A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange

Question 15

Initial public offering

Answer 15

A situation where a company sells all or part of the business to external shareholders for the first time.

Question 16

Social enterprise

Answer 16

Any organisation that has a social and/or environmental purpose at its core; it describes the primary purpose of a business, not its legal form.

Question 17

For profit social enterprise

Answer 17

Any organisation that has a social and/or environmental purpose at its core; it describes the primary purpose of a business, not its legal form.

Question 18

Value

Answer 18

All the benefits that a business creates for the stakeholders involved.

Question 19

Private sector for-profit social enterprise

Answer 19

A type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses.

Question 20

Public sector for-profit social enterprise

Answer 20

A type of social enterprise that produces goods and services that are typically provided by the public sector.

Question 21

Cooperative

Answer 21

A business owned and operated by its members, who share the profits.

Question 22

Stakeholder

Answer 22

Any individual or group that affects, or is affected by, an organisation

Question 23

Non-profit social enterprise

Answer 23

A type of social enterprise that produces goods and services to meet human needs, but where any surpluses earned must, by law, be reinvested back into the business.

Question 24

Surplus

Answer 24

A situation where a non-profit social enterprise has greater revenue than costs; non-profits must reinvest the money into the enterprise.

Question 25

Non-governmental organisations (NGOs)

Answer 25

A sub-category of non-profit social enterprises that have a purpose or mission to benefit society or the environment.