1.3 And 1.4 Flashcards
What is Capital
Money raised to start or develop a business
What is unlimited liability
Where the responsibility of all debts of the business rests with the owner(s)
What’s limited liability
Where the responsibility of all debts is limited to the amount invested by a shareholder
What is a deed of partnership
A document setting out the operations of the partnership including the amount of capital invested and how profits will be shared
What are sleeping partners
They are people who provide capital for the business but take no part in the running of the business . Their livability is limited to the amount they invest
What is a dividend
The money paid to shareholders from the profits of a limited company
What’s a sole trader
Are businesses owned my 1 person
What are some positives of being a sole trader
- easy and cheap to set up
- owner has complete control
- keep all the profits
- financial information is not shared
What are some negatives of being a sole trader
- unlimited liability
- hours of work may be long or cause illness
- continuity
- shortage of capital
- skill shortage
What’s a partnership
A business owned between 2-20 people . A deed of partnership should be completed by the business
What are some positives of a partnership
- more capital can be put in (up to 19 more people)
-easy to set up - more skills
- workload shared
- financial information is not shared
What are some negatives of a partnership
- profit must be shared
- unlimited liability
- slower decision making
- continuity
Who had unlimited liability
Sole traders and partnerships
Who has limited liability
Private limited companies and public limited companies
What is the abbreviation for private limited companies
Ltd
What are private limited companies
Businesses owned by 2 shareholders
What are some positives of being a private limited company
- limited liability
- continuity
- can raise more money
- control over share sale
What are some negatives of being a private limited company
- some financial information is available
- admin (setup, operations and financial information must be sent to a registrar of companies. )
- sale shares is restricted
- dividends
What is the abbreviation for public limited company
Plc
What’s a public limited company
A business owned by shareholders . Shares in the business can be bought and sold on the stock exchange
What are some positives of a public limited company
- Ability to raise large capital
- easier to borrow
-limited liability
What are some negatives of a public limited company
-possibility of takeover
- costs ( a plc must have £50000 worth of shares )
- big businesses can be inefficient
- financial information is available
What are limited liability partnerships
Partnerships that have all of benefits of being a partnership. But also have limited liability
What is satisfacing
Making just enough profit to proved the business owner with a decent living . It’s more common in smaller businesses
What is market share
The share of the total market for a product or service and is shown
What are business objectives
What a business aims to achieve
Define profit
The difference between revenue and costs
What is survival
When a business manages to just keep going
What is growth
Where a business becomes larger for example by making more products or opening more places where goods and services are sold
What doesProviding a service mean
Where a business makes sure the needs of customers are being met
What are some likely business objectives
Profit , growth , survival , providing a service or an increase in market share
How to calculate market share
Revenue of business divided by total shares in market x 100 = market share
Why might different businesses have different objectives
- they may want a quiet life
- a plc may want dividends for shareholders or increase market share
- a business might want to help out the community
- a business in a competitive industry may just want to survive
