business key terms

Question 1

sole trader

Answer 1

a business run by an individual

Question 2

LTD

Answer 2

a business where shares are bought/sold privately

Question 3

PLC

Answer 3

a business where shares can be bought/sold on the stock exchange

Question 4

unincorporated business

Answer 4

liability falls on shareholders rather than business itself (usually sole traders/partnerships)

Question 5

incorporated business

Answer 5

liability falls on business not shareholders (usually LTDs/PLCs)

Question 6

limited liability

Answer 6

means shareholders have no responsibility over business debt

Question 7

unlimited liability

Answer 7

means shareholder assets can be seized to pay off debts

Question 8

shareholders

Answer 8

people who invested to own a percentage of the business - gain/lose money when stocks rise/fall and may be paid dividends

Question 9

dividends

Answer 9

payments may be made from the business to shareholders if it has made a profit

Question 10

drawings

Answer 10

money/assets withdrawn from a business

Question 11

articles of association

Answer 11

set out the powers and responsibilities of the directors and members of a business

Question 12

memorandums of association

Answer 12

documents that set up and govern a business - also sets out how business is run, governed and owned

Question 13

divorce of ownership and control

Answer 13

where business owners don’t control day-to-day running of a business

Question 14

stock exchange

Answer 14

where shares in PLCs can be bought and sold freely

Question 15

stakeholders

Answer 15

anyone who has an interest in the business’s success - not exclusively shareholders

Question 16

franchise

Answer 16

sells business format (licensing and products) to entrepreneurs - heavy involvement in each outlet

Question 17

co-operative

Answer 17

group coming together for joint cause (e.g. to provide employment or products when other businesses couldn’t)

Question 18

social enterprise

Answer 18

business set up to primarily solve a social objective

Question 19

market capitalisation

Answer 19

total value of all issued shares (share price * no. shares issued)

Question 20

ordinary share capital

Answer 20

amount of money raised from issues of common shares to public

Question 21

annual general meeting (AGM)

Answer 21

meeting where shareholders question managers and directors about the business

Question 22

registrar of companies

Answer 22

where you can find documents and registrations for a business

Question 23

PESTLE

Answer 23

political, economic, social, technological, legal, environmental (factors which affect businesses)

Question 24

interest rate

Answer 24

the proportion of a loan paid by the borrower to the lender

Question 25

SPICED

Answer 25

strong pound imports cheap exports dear(expensive)

Question 26

margin of safety

Answer 26

The amount which the business’s current level of output exceeds its break-even output