1.2 Types of business entities

Question 1

What sector is maintained by individuals?

Answer 1

Private

Question 2

What sector is maintained by governments?

Answer 2

Public

Question 3

What is the main aim of the private sector?

Answer 3

Make profits

Question 4

What is the main aim of the public sector?

Answer 4

Provide goods and services

Question 5

Retained profit

Answer 5

Profit reinvested into the business for growth

Question 6

Unlimited Liability

Answer 6

Completely responsible for losses

Question 7

Limited Liability

Answer 7

The sum invested is the most that can be lost

Question 8

What are personal businesses run by a single person called?

Answer 8

Sole trader/proprietor

Question 9

What are businesses managed by 2 or more people called?

Answer 9

Partnership

Question 10

What legal document is signed for partnerships?

Answer 10

The partnership deed

Question 11

What is a financial advantage of sole trading?

Answer 11

The profit is kept by the trader

Question 12

What is a legal advantage of sole traders?

Answer 12

Very few formalities

Question 13

What is a growth disadvantage of sole trading?

Answer 13

Limited economies of scale

Question 14

Economies of Scale

Answer 14

The benefit of lower unit costs as the busiess grows

Question 15

Two social disadvantages of partnerships

Answer 15

Lack of harmony, prolonged decision making

Question 16

Financial disadvantage of partnerships/companies

Answer 16

Profits are shared

Question 17

Who manages companies?

Answer 17

Shareholders

Question 18

BOD

Answer 18

Board of Directors

Question 19

Who selects the BOD

Answer 19

The shareholders to manage the business on their behalf

Question 20

Private Limited Companies sell stocks to?

Answer 20

Friends and Family

Question 21

Public Limited Companies sell stocks to?

Answer 21

The public through a stock exchange

Question 22

Three documents for registering LLCs

Answer 22

Memorandum of Association, Articles of Association, Certificate of Incorporation

Question 23

Memorandum of Association

Answer 23

A document that briefly details the company

Question 24

Articles of Association

Answer 24

Rights, Roles and Powers of Shareholders and Annual General Meetings

Question 25

Certificate of Incorporation

Answer 25

Certifies that the company is registered

Question 26

2 Financial Advantages of LLCs

Answer 26

Tax Benefits and More Finance

Question 27

3 Social Disadvantages of LLCs

Answer 27

Lack of Privacy, Communication Problems, Loss of Control

Question 28

1 Social Advantages of Partnerships

Answer 28

Specialisation

Question 29

Social Enterprises

Answer 29

Profit Generating Business, Focused on social objectives

Question 30

What is the main aim of private social companies?

Answer 30

Achieve their social objectives

Question 31

What is the main aim of NGOs?

Answer 31

Achieve social objectives

Question 32

How do private social companies sustain themselves?

Answer 32

Through small profits

Question 33

How do NGOs sustain themselves?

Answer 33

Donations

Question 34

Who manages cooperatives?

Answer 34

Anonymous people

Question 35

How does a cooperative’s decision making work?

Answer 35

Democracy; voting