business ventures

Question 1

Factors when choosing a form of ownership

Answer 1

The start-up cost and the future capital

The risk involved

How capital will be contribute

Question 2

What is from of ownership

Answer 2

The legal position of the business and the way it is owned

Question 3

What is prospectus

Answer 3

prospectus is a document inviting the public to buy

Question 4

An audit is what

Answer 4

process where an organization’s accounts are checked to make sure its financial opeations are honest

Question 5

The difference between profit and non-profit organization

Answer 5

Profit companies

This company is formed with one aim of making a profit

A company incorporated for financial gain for its shareholders

Profit orgainsations are responsible for paying taxes based on their profit

non-profit companies

This company is formed for charity purposes or to promote social and cultural activities

A non-profit organisations are not required to pay taxes on net income

Question 6

what is a sole trader

Answer 6

is a business that is owned and managed by one person

Question 7

characteristics of a sole trader

Answer 7

There are no legal requirements regarding the name regarding the name of the business

Legally’ the sole trader and the business are not separate entities

the owner has unlimited liability

Question 8

Advantages of a sole trader

Answer 8

Its easy and quick to form a sole trader and less control

The owner can take quick decisions

All assets of the business are owned by the sole trader

Question 9

The disadvantages of the sole trader

Answer 9

if the owner doesnt have enough knowledge the business may fail

They can’t expand the business operations cause of limited capital

Question 10

What is a partnership

Answer 10

When the business is owned by two or more people

Question 11

Characteristics of the Partnership

Answer 11

Should be a minimum of two people

They share profit according to the partnership agreement

There are no legal requirements

Question 12

Advantages of a partnership

Answer 12

all bring their own knowledge in the business

All partners have a personal interest in the business

Question 13

Disadvantages of the partnership

Answer 13

it becomes difficult to raise capital

discussion between the partners may be slow

Question 14

difference between a sole trader and partnership

Answer 14

Sole

Owned by one person

Quick and easy decisions

If the owner doesnt have enough knowledge the business may fail

Partnership

Owned by two or more people

slow decisions between partners

put skills together to make the best decisons

Question 15

characteristics of of a close corporation

Answer 15

Must end with CC

Each member contribute some assets

Members of the CC both own and control the business

Question 16

the advantages of CC

Answer 16

Can be converted to a private or public company

there are fewer legal requirements for the company

Question 17

the disadvantages of CC

Answer 17

there are no directors

limited growth the business can only have ten members

Question 18

Characteristics of a private company

Answer 18

Limited liability

The company cant sell shares to the public

It must prepare annual financial statements

Question 19

Advantages of a private company

Answer 19

Managed by one skilled director

the business has continuity

information about the business is only known by shareholders

Question 20

Disadvantages of private

Answer 20

Directors may sometimes be held liable for debts

decision making takes a long period of time cause its a large group of people

Question 21

what is a personal liability company

Answer 21

the name ends with INC

Question 22

characteristics of a public company

Answer 22

A minimum of one person

It ends with LTD

The shareholders have limited liability are not personally liable for the debts of the business

Question 23

Advantages of a public company

Answer 23

Shareholders can sell their shares

Strict regulatory requirements protect shareholders

Easy to raise funds for the growth through the sales of shares

Question 24

Disadvantages of public company

Answer 24

Auditing of financial statement is compulsory

Increased director’s fees willl increase expenses which will reduce net profit

Question 25

Differences between the private and public company

Answer 25

Private

May no offer shares to the general public

minimum of one director

Name must end with proprietary Limited

Public

Shares are freely transferable

Name must end with Limited

Minimum of three directors

Question 26

Characteristics of State owned company

Answer 26

The company is financed by the government

The name ends with letters SOC

The SOC is listed as a public company

Question 27

Advantages of an SOC

Answer 27

Limited liability for shareholders

Profits may be used to finance other state departments

Jobs are created for all skill levels

Question 28

Disadvantages of an SOC

Answer 28

Losses must be covered by the taxpayers

Government can lose money if the business fails

SOCs must follow strict regulators for operations to raise capital

Question 29

Characteristics of Non profit company

Answer 29

The main aim is to provide a service and not make a profit

The name of the company must end in NPC

All profits must be used for the primary objective the NPC

Question 30

Advantages of an NPC

Answer 30

profits are solely for the primary objective of the organization

An NPC existence can last long after the founders leave the business