Chapter 1: Business Foundations

Question 1

Sole traders

Answer 1

A single-owned proprietorship where the owner is entitled to keep all profits after tax has been paid but is liable for losses

Question 2

Private sector

Answer 2

Part of the economy operated by private individuals, groups of institutions

Question 3

Public sector

Answer 3

Part of the economy operated by the government

Question 4

Registered Business Name (RBN)

Answer 4

A trading name under which a person (sole trader) or partnership conducts its business or trade

Question 5

Unlimited liability

Answer 5

Full liability of owner (if their business fails) to the extent of their personal assets

Question 6

Partnerships

Answer 6

Combined businesses of two to twenty partners sharing resources and expertise

Question 7

Partnership agreement

Answer 7

A formal document that outlines the duties and responsibilities of the parties of a partnership

Question 8

Perpetuity

Answer 8

Having ongoing life (that is, never-ending)

Question 9

Company

Answer 9

A separate entity (incorporated body) that is subject to the requirements of the Corporations Act 2001, owned by shareholders who have limited liability, run by directors and has perpetual succession

Question 10

Incorporation

Answer 10

The process of legally declaring a corporate entity as separate from its owners

Question 11

Australian Securities and Investments Commission (ASIC)

Answer 11

Independent Australian Government body that acts as Australia’s corporate regulator

Question 12

Australian Company Number (ACN)

Answer 12

A nine-digit number to be used on a company’s common seal and all public documents involving the company

Question 13

Limited liability

Answer 13

Shareholders are only personally liable to the level of their original investment in the company

Question 14

Goods and Services Tax (GST)

Answer 14

A broad-based tax of 10% on most goods, services and other items sold or consumed in Australia

Question 15

Prospectus

Answer 15

An invitation to the public and potential investors to purchase shares in a particular company

Question 16

Private limited company (Pty Ltd)

Answer 16

A separate legal entity made up of a maximum of 50 non-employee shareholders

Question 17

Public listed company (Ltd)

Answer 17

A separate legal entity made up of unlimited shareholders openly traded on the Australian Securities Exchange (ASX)

Question 18

Social enterprises

Answer 18

Private sector business that distributes profits to the benefit the community rather than the individual shareholders

Question 19

Social entrepreneur

Answer 19

A person who establishes an enterprise with the aim of solving social problems or effecting social change

Question 20

Government business enterprise

Answer 20

A government-owned business seeking to sell goods and services at a price to cover costs

Question 21

Make a profit

Answer 21

An objective that aims to increase in financial gains

Question 22

To increase market share

Answer 22

An objective that aims to gain a greater percentage of the market through its sales

Question 23

To improve efficiency

Answer 23

An objective that aims to achieve more output for each unit of input

Question 24

To improve effectiveness

Answer 24

An objective that aims to achieve a business’ stated objectives by putting in place strategies

Question 25

To fulfil a market need

Answer 25

An objective that aims to recognise and satisfy the needs of its market by assessing the potential size and identifying which part to concentrate on

Question 26

To fulfil a social need

Answer 26

An objective that aims to revolve around the business as a ‘good citizen’ and promote social objectives through policies and practices

Question 27

To meet a shareholder’s expectation

Answer 27

An objective that aims to meet shareholders’ expectations through success and profit

Question 28

Business strategies

Answer 28

Methods and plans that are implemented to develop and grow a business and to meet business objectives

Question 29

Objectives

Answer 29

Statements of desired achievement that provide direction for the business

Question 30

Mission statement

Answer 30

A statement that defines what the business wants to achieve now

Question 31

Vision statement

Answer 31

A statement that outlines the aspirations and values of the business

Question 32

Values statement

Answer 32

A statement that outlines what the organisation sees as its corporate values and centres on integrity, honesty and ethical behaviour