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AQA AS Business > 3.1.2 > Flashcards

3.1.2 Flashcards

1
Q

What is the Private Sector?

A

A part of the economy that is owned by shareholders and by private individuals.

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2
Q

What is a sole trader?

A

When individuals establish and operate a business on their own.

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3
Q

What are 2 features of operating as a sole trader?

A

1) small business

2) must personally serve customers, deal with suppliers, keep accurate and up to date records.

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4
Q

What are 5 advantages of operating as a sole trader?

A

1) easy and cheap to set up
2) few legal formalities
3) able to respond quickly to problems
4) more business privacy
5) owner keeps most of the profit

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5
Q

What are 3 disadvantages of operating as a sole trader?

A

1) unlimited liability, homes may be use to pay of debts
2) less money to invest into the business, income tax must be payed with the profit
3) no income when the owner is ill or off work

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6
Q

What does Ltd stand for?

A

Private Limited Company

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7
Q

What is a Ltd?

A

Privately owned business entity

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8
Q

What are 3 features of operating as a Ltd?

A

1) Non-transferability for shares
2) doesn’t work in the stocks
3) separate legal identity

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9
Q

What are 3 advantages of operating as a Ltd?

A

1) Limited Liability
2) Access to more capital then unincorporated business
3) more private and flexible than a Plc

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10
Q

What are 2 disadvantages of operating as a Ltd?

A

1) shares are less attractive as they cannot share on the stock exchange
2) harder than a Plc, to raise money.

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11
Q

What does Plc stand for?

A

Public Limited Company

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12
Q

What is a Plc?

A

A company who products are traded on the stocks, and can be bought and sold by anyone.

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13
Q

What are 2 features of operating as a Plc?

A

1) selling shares to investors, raises capital

2) minimum of three directors.

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14
Q

What are 4 advantages of operating as a Plc?

A

1) limited liability
2) Business becomes well know, good and bad publicity
3) greater scope for new investments
4) more willing suppliers to offer credit

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15
Q

What are 3 disadvantages of operating as a Plc?

A

1) must publish a great deal o financial information about it Performance
2) they have greater scrutiny for their activities
3) founder may loose control if their share holding fall below 51%,risk of a hostile takeover

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16
Q

What is the definition of unlimited liability?

A

Being personally responsible for all the actions of their business. They could lose their personal assets if the business falls i to financial problems

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17
Q

What is the definition of a company?

A

A business organisation that has its own legal identity, has limited liability

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18
Q

What is the definition of incorporation?

A

The process of establishing a business as a separate legal identity.

19
Q

What is the definition of a shareholder?

A

A investor in, and one of the owners of, a company

20
Q

What is the definition of limited liability?

A

In the event of financial difficulties, the personal assets of shareholders are safe.

21
Q

What is the definition of dividends?

A

A share of the profits that is distributed between the shareholders

22
Q

What is the definition of market capitalisation?

A

The total value of the issued shares of a public limited company

23
Q

What is the Public Sector?

A

Comprises the organisations that are owned by national or local government

24
Q

What are the three major elements of the Public Sector?

A

Public corporations
Public services
Municipal services

25
Q

What are Public Corporations?

A

Enterprises owned by the state, but sell to the public

E.g. Manchester Airport

26
Q

What are Public Services?

A

Involves organisations that provide services to the whole nation

E.g. NHS

27
Q

What are Municipal Services?

A

Services offered by local governments and councils

E.g. Library

28
Q

What is a Not-For-Profit-Business?

A

A business they doesn’t make a profit, the build the business because they have a strong opinion on something like the environment, or because they want a hobby, or to replace employment

29
Q

What is a Mutual Business?

A

Characterised because they are run for the benefit of their members

30
Q

What is an example of a Mutual Business?

A

Co-operatives

31
Q

What must cooperatives reflect? 4

A

Four ethical issues:

1) honesty
2) openness
3) social responsibility
4) caring for others

32
Q

What are the three types of Co-operatives?

A

Consumer Co-operatives, customers are members
Worker Co-operatives, owned and operated by employees
Producer Co-operatives, group of businesses work together & benefits from things like increased bargaining power

33
Q

What are opposed things about Co-operatives?

A

Not employing skilled professionals for the roles, rather then relying on elected members who may not be suited for the role

34
Q

Who buys shares in a business?

A

Financial institutions

35
Q

What are the reason for buying shares?

A

Primarily for financial reasons

36
Q

What are the risks of buying shares?

A

The price of shares can easily fall

37
Q

What are the risks of buying ordinary shares?

A

Most risky type because they will only be paid when the larger investors are paid

38
Q

What is the role of shareholders?

A

Have influence in decision making. One vote if for one share. The more shares, the more votes and influence

39
Q

What can influence share prices?

A

Company’s Performance

Business Trading Environment

40
Q

What are Regulatory Accounts?

A

An account of information that a Plc has to provide to the public twice a year

41
Q

How does the business doing/expected to be doing well effect the share prices

A

They would increase

42
Q

How does the businesses environment effect share prices?

A

Good economic conditions can lead to investors wanting to invest more or at all. Increasing share price

43
Q

What is the Rising share prices effect on a business? 3

A

1) Reflects well on the company’s managers - receive bonuses
2) Easier to raise capital when share prices are higher
3) Shareholders will be more willing to buy

AQA AS Business (25 decks)

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