Business structure

Question 1

Difference between public and private sector

Answer 1

• private sector is concerned with profit

- Public sector is concerned with giving a service to the community for free

Question 2

Aims of private sector

Answer 2

Survival
Profit maximization
Growth
Social responsibility

Question 3

Aims of public sector

Answer 3

• To provide essential public services

- To use resources well for the benefit of the community

Question 4

Legal structure of a sole trader

Answer 4

a business that is owned and operated by one person and has unlimited liability

Question 5

Legal structure of a partnership

Answer 5

A business that is owned by 2-20 people who sign a deed of partnership and has unlimited liability

Question 6

Legal structure of a private limited company

Answer 6

Owned and controlled by invited shareholders and has limited liability and can have up to 50 shareholders

Question 7

Importance of public sector

Answer 7

• provides service for free - availability
• Prevents monopolies
• Provide merit services education

Question 8

Importance of private sector

Answer 8

• Creates good and services public service cannot create

Question 9

Legal structure of plc

Answer 9

Legal structure of plc

Question 10

unlimited liability

Answer 10

The owner is personally and fully responsible for all losses and debts of the business

Question 11

limited liability

Answer 11

A form of business ownership in which the owners are liable only up to the amount of their individual investments.

Question 12

Advantages of a sole trader

Answer 12

Easy to set up , owner keeps the profit, accounts are kept private

Question 13

Disadvantage of sole trader

Answer 13

• 100% liability, stress and responsibility,
• lack of continuity, limited growth, limited access to finance, - - challenging competition in market, false decision-making,

Question 14

Advantages of Partnership

Answer 14

Ease of start-up
Availability of capital and credit
Personal interest
Combined business skills and knowledge
Retention of profits
No special taxes

Question 15

Disadvantages of a private limited company

Answer 15

• publish financial information
• setting-up costs high
• profits shared more members
• time to transfer shares new owners
• can’t raise large amounts

Question 16

Advantages of a public limited company

Answer 16

• Limited Liability
• Greater Public Profile
• No selling shares restrictions
• Raise higher level of funds

Question 17

Disadvantages of a public limited company

Answer 17

have  publish  financial information
setting-up costs  high
profits are shared  more members
 time to transfer shares  new owners
can't raise large amounts

Question 18

Advantages of a public limited company

Answer 18

• Limited Liability
• Greater Public Profile
• No selling shares restrictions
• Raise higher level of funds

Question 19

Disadvantages of a public limited company

Answer 19

• Certain financial information must be available- for everyone to see including competitors and customers
• Shareholders expect dividends
• Expensive+ complicated to set up

Question 20

Social enterprise

Answer 20

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners

Question 21

Charities

Answer 21

an organisation set up to raise money to help people in need or to support causes that require funding