Business test 4

Question 1

What is a sole trader?

Answer 1

A sole trader is a one-owner business (it is owned and controlled by one person).

Question 2

Private sector=

Answer 2

Sole traders, partnerships, private limited company (Ltd), Public limited company (Plc)

Question 3

Public sector=

Answer 3

central government, local government

Question 4

third sector=

Answer 4

charities, social clubs

Question 5

Unlimited liability

Answer 5

When the owner of a business can loose everything including their personal belongings if the business goes into dept.

Question 6

Limited liability

Answer 6

The owner can only lose up to the value of the share that they have in their company

Question 7

Features of a sole trader?

Answer 7

One person owns and runs the business, owner is responsible for all the business debts, relatively easy to set up, business accounts are kept private.

Question 8

Negatives of a sole trader?

Answer 8

Work may stop or business may close if owner is ill, difficult for owner to get time off, may be limited finance available, if owner dies the business may cease trading, no one to help you make decisions.

Question 9

Positives of a sole trader?

Answer 9

Owner gets to make all the decisions, owner keeps all the profits, you dont have to pay for extra costs and employees, no one is going to stop your decisions.

Question 10

Features of a partnership?

Answer 10

Between 2 and 20 people own and run the business, partners are responsible for the depts of the business, partnerships aim to earn a profit, survival and growth

Question 11

Positives of a partnership?

Answer 11

Partners bring different skills and knowledge, easier for partners to take time off, workload can be shared between partners, may be easier to obtain loans from banks, partners can specialise in different aspects of the business, more capital (money) available.

Question 12

negatives of a partnership?

Answer 12

Disagreement and arguments between partners, profits have to be shared, partners are responsible for the depts of the business

Question 13

What is a private limited company?

Answer 13

This is a company whose shares are owned privately.

Question 14

Features of a private limited company?

Answer 14

Usually a family owned business, private shareholders own the business, final accounts must be prepared and made available to interested parties, shareholders appoint directors to run the company, company name ends with LTD.

Question 15

Positives of a private limited company?

Answer 15

Owners have limited liability so they cant loose personal belongings, cannot sell shares on the market, control of the company remains within the family and not lost to outsiders, easier to raise finance from banks and other lenders.

Question 16

Negatives of a private limited company?

Answer 16

Cannot sell shares on the stock market, profits have to be shared between shareholders.

Question 17

Aims of all three (Private limited companies, sole traders and partnerships)?

Answer 17

Survival and growth, the company aims to maximise profits.

Question 18

What is a Public limited company?

Answer 18

A public limited company (plc) is a company whose shares are available for purchase by the public on the Stock Market.

Question 19

Public limited company aims?

Answer 19

They aim to maximise profit, growth and survival.

Question 20

Public limited company negatives?

Answer 20

Costly and fairly complicated to set up, they have no control over who buys shares on the stock market, members of the public must be able to access all financial records,

Question 21

Public limited company positives?

Answer 21

Members of the public can buy shares in the company on the stock exchange, can become very powerful and dominant businesses,easy to borrow huge amounts of money from bank and other lenders, public limited companies tend to be large, limited liability shareholders can only lose the value of their shares.

Question 22

Public limited company features?

Answer 22

name of the company ends with the letters plc, owned by shareholders by board of directors,