Business

Question 1

How to create a balance sheet

Answer 1

A=L+OE

Assets=Liabilities+Owners Equity

Question 2

Business ethics

Answer 2

The moral guidelines and principles a business should follow.
To be an ethical producer- when using resources from poorer countries, ensure that a fair trade price is paid for supplies
To be an ethical user- buy products from businesses with a strong ethical reputation,

Question 3

Location of a business

Answer 3

You want to be located in a place that will attract customers and make them feel safe coming to and from your store. You will need to make sure you have a large enough space for your store. You would not want to put your store right next to or closely to another store with the same equipment

Question 4

Balance sheet

Answer 4

A financial report which shows the financial position of the business at a given point on time. A balance sheet is usually written up at the end of each month or year. (End of financial year 30th June)

Question 5

Current Assets

Answer 5

Assets which will be used or can be easily turned into cash within 12 months (cash, stock(food), debtors(people who owe you money))

Question 6

Non-current Assets

Answer 6

Assets that will be used beyond 12 months (Furniture, equipment, vehicle)

Question 7

Current Liabilities

Answer 7

All debts that need to be payed within 12 months (short term loans, creditors(people you owe money to))

Question 8

Non-current Liabilities

Answer 8

All debts that are due beyond 12 months (long term loan)

Question 9

Owner’s Equity

Answer 9

Financial contributions made by the owner and therefore what the business ‘owes’ the owner.

Question 10

Sole Trader

Answer 10

Owned by one person. He/She may employ other workers. The owner is totally responsible for the business and if there is a legal issue the owner has UNLIMITED LIABILITY (this means if he/she is taken to court, they can lose private possessions (car,house))

Question 11

Partnership

Answer 11

Owned by 2-20 people. Other workers may be employed. All partnerships have responsibility and all have UNLIMITED LIABILITY.

Question 12

Company

Answer 12

Private companies have between 1-50 owners. Public companies can have an unlimited amount of owners, who can buy shares via the share market. Both public & private companies have LIMITED LIABILITY (this means that if they are taken to court, they can only lose the business, not their private possessions.