Business in the real world

Question 1

What is a good

Answer 1

A good is a physical item

Question 2

What is a service?

Answer 2

Actions performed by other people to help aid the customer

Question 3

Give 4 reasons why a business may be set up

Answer 3

.When someone starts making a good or service that they think customers will want to pay for
. To distribute goods e.g. buy products from manufacturers then sell them
.To benefit other people(non-for- profit organisations)
.When a business opportunity is found

Question 4

What is the primary sector?

Answer 4

Sector which produces raw materials (e.g. natural resources)

Question 5

What is the secondary sector?

Answer 5

Sector which manufactures goods (e.g. building and construction industry)

Question 6

What is the tertiary sector?

Answer 6

Sector which provides services (e.g. schools, advertising for another business etc.)

Question 7

What is the name of someone who wants to start up their own business

Answer 7

An entrepreneur

Question 8

What is enterprise?

Answer 8

Identifying an opportunity then taking advantage of it

Question 9

Give an example of an enterprise activity?

Answer 9

starting up a new business or helping with an existing one

Question 10

Give an advantage of being your own boss

Answer 10

.Flexible working hours

.You decide the tasks which you have to do

Question 11

Give reasons why someone may decide to be an entrepreneur

Answer 11

.Financial reasons
.When a gap in the market is identified
.Wanting the independence of being your own boss
.Having an interest
.Being dissatisfied with your current job

Question 12

Give 4 characteristics an entrepreneur must have

Answer 12

. Hard-working
.Organised
. Innovative
.Have a willingness to take a calculated risk

Question 13

Why should entrepreneurs be organised?

Answer 13

To make a business plan for the business and also plan for the future

Question 14

Why should an entrepreneur be innovative?

Answer 14

To come up with new ideas and think of solutions to problems

Question 15

Name the 4 factors of production (4 sections of resources)

Answer 15

.Land
.Labour
.Capital
.Enterprise

Question 16

Give examples of land resources

Answer 16

. Territory
.Non-renewable
Renewable
.Materials extracted by mining
.Water
.Animals found in an area

Question 17

What is labour?

Answer 17

Work done by people who contribute to the production process

Question 18

What is capital?

Answer 18

.Equipment, factories and schools that help to produce goods or services, different from land as it has to be made first

Question 19

What is enterprise(factors of production)?

Answer 19

. People who take risks and create things from the other three factors of production.

Question 20

What is opportunity cost

Answer 20

.The benefit given up in order to do something else

Question 21

What is an entrepreneur?

Answer 21

Someone who takes on the risk of enterprise activity

Question 22

Describe a sole trader business?

Answer 22

A sole trader business has just one owner

Question 23

Give examples of sole trader business’s

Answer 23

Hairdressers, plumbers newsagents and fishmongers

Question 24

Give 3 advantages of sole trader business’s

Answer 24

They’re easy to set up, which means they’re great for start-up businesses
.You get to be your own boss
.You alone decide what happens to any profit

Question 25

Give 4 disadvantages of a sole trader business

Answer 25

You might have to work long hours and many not get many holidays
.You have unlimited liability, so if the business goes bust owing 10 million pound you are liable
.You’re unincorporated, so the business doesn’t have its own legal identity so if anyone sues the business they’ll sue you
.It can be hard to raise money, many business’s don’t send loans to sole traders as they are risky

Question 26

How many partners are there in a partnership?

Answer 26

Usually between two to twenty

Question 27

Name the agreement made in partnerships

Answer 27

The deed of partnership

Question 28

Give three advantages of a partnership

Answer 28

.More owners means more ideas, and a greater range of skills and expertise
. More people to share the work
. More owners means more capital(money) can be put into the business, so it can grow faster

Question 29

Give 4 disadvantages of a partnership

Answer 29

.Each partner is legally responsible for what all the other partners do
.Like sole traders, most partnerships have unlimited liability
.More owners means more disagreements, decision making can be slow and unpleasant
.The profit is shared between the partners instead of being kept to one person

Question 30

Give examples of partnership businesses

Answer 30

Accountancy firms, solicitors and doctors’ surgeries

Question 31

What are limited companies owned by?

Answer 31

Shareholders

Question 32

is a limited company incorporated

Answer 32

yes,

Question 33

What does it mean for a business to be incorporated?

Answer 33

It means it has a separate legal identity to the owners, so any money property, tax bills, etc. in the company;’s name belong to the company. It also means that the owners have limited liability, so if anything goes wrong the company is liable not the owners, the owners only risk losing the money that they have invested

Question 34

Give a feature of a limited company

Answer 34

Owned by shareholders, the more shares you get the more control you get.

Question 35

Give the sign that private limited companies have

Answer 35

Ltd.

Question 36

What does the private mean in private limited companies?

Answer 36

It means that the shares can only be sold if all the shareholders agree, shareholders are often same members of a family

Question 37

Give 4 advantages of a private limited company

Answer 37

.Limited liability - so you cant lose more than you invest unlike partnerships and sole traders
.Being incorporated, the company can continue trading if a shareholder dies unlike partnerships
.Its easier for an Ltd company to get a loan or mortgage than sole trader or partnership
.For someone to share, all the shareholder have to agree so the owners still have control over how many people get to share the profits and how the business is managed

Question 38

Give 2 disadvantages of a private limited company

Answer 38

They’re more expensive to set up due to all of the legal paper work that has to be done
. Unlike sole traders and partnerships the company is legally obliged to publish its accounts every year(they don’t have to be made public