1.2 Types of business entities

Question 1

Share

Answer 1

A certificate confirming part ownership of a company. Most types of share entitle shareholders to dividends from profits

Question 2

Privately held company

Answer 2

A business that is owned by shareholders who are often members of the same family; this company cannot sell shares to the general public

Question 3

Publicly held company

Answer 3

A limited company with the legal right to sell shares to financial institutions and the general public; its share price is quoted on the national stock exchange

Question 4

Private sector

Answer 4

Comprises businesses owned and controlled by individuals or groups of individuals

Question 5

Initial public offering (IPO)

Answer 5

The process of offering for sale the shares of a privately held company to financial institutions and the general public

Question 5

Shareholders

Answer 5

Individuals or institutions that buy/own shares in a limited company

Question 6

Public sector

Answer 6

Comprises organisations accountable to and controlled by central or local government (the state)

Question 7

Mixed economy

Answer 7

Economic resources are owned and controlled by both private and public sectors

Question 8

Free-market economy

Answer 8

Economic resources are owned largely by the private sector, with very little state intervention

Question 9

Command economy

Answer 9

Economic resources are owned, planned and controlled by the state

Question 10

Privatisation

Answer 10

The sale of public sector organisations to the private sector

Question 11

Privatisation

Answer 11

The sale of public sector organisations to the private sector

Question 12

Sole trader

Answer 12

A business that is exclusively owned by one person who has full control of it and is entitled to all of the profit (after tax)

Question 13

Partnership

Answer 13

A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities

Question 14

Limited liability

Answer 14

The only liability - or potential loss - a shareholder (or partner in a limited liability partnership) has if the company fails is the amount invested in the company, not the total wealth of the shareholder

Question 15

Social enterprise

Answer 15

A business with social and/or environmental objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners

Question 16

Social entrepreneur

Answer 16

A person who establishes an enterprise with the aim of solving social problems or achieving social change

Question 17

Charity

Answer 17

An organisation set up to raise money to help people in need or to support causes that require funding

Question 18

Triple bottom line

Answer 18

The three objectives of social enterprises: economic, social and environmental

Question 19

Public corporation

Answer 19

A business enterprise owned and controlled by the state

Question 20

cooperative

Answer 20

a group of people acting together to meet the common needs and aspirations of the members, sharing ownership and making decisions democratically

Question 21

non-profit organisation

Answer 21

any organisation that has aims other than making and distributing profit and which is usually governed by a voluntary board

Question 22

Non-governmental organisation (NGO)

Answer 22

A legally constituted body that functions independently of any government and that has a specific humanitarian or social aim/purpose