1.2 types of business entities Flashcards
What is the private sector?
Businesses owned by private individuals.
What is the public sector?
Businesses owned by the government.
What is nationalization?
When a government takes ownership of a business from the private sector into the public sector.
What is privatization?
When a government transfers ownership of a business from the public sector to the private sector.
Define a sole trader.
A person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.
Give an example of a sole trader.
Plumbers, decorators, window cleaners, and hairdressers.
What is a partnership?
A business structure where two or more people work together.
In which professions are partnerships common?
Accountancy, medicine, and law.
What are private sector companies?
Companies owned by private individuals or entities.
What are public sector companies?
Companies owned or primarily owned by the government.
What is a privately held company?
A company owned by shareholders with restrictions on share sales.
What is a publicly held company?
A company owned by shareholders without restrictions on share sales.
What are dividends?
Money paid out of profits to shareholders as a reward.
True or False: Publicly held companies are in the public sector.
False.
What is one advantage of being a company?
Liability for shareholders is limited.
What is one disadvantage of being a company?
The company can be expensive to establish, maintain, and wind up.
What is one advantage of being a sole trader?
You keep all profits after tax.
What is one disadvantage of being a sole trader?
You are liable for all losses.
What is one advantage of being in a partnership?
Partners can specialize in different aspects of the profession.
What is one disadvantage of being in a partnership?
Partners are jointly liable for debts.
What is a cooperative?
A business owned and run by its members, each having one vote.
What are non-profit social enterprises?
Organizations that aim to earn a surplus to reinvest in society.
What is a multinational corporation (MNC)?
A company with business operations in at least one country other than its home country.
Fill in the blank: A _______ is a business that is owned and run by and for its members.
[cooperative]
