Chapter 1: Business Foundations Flashcards
Sole traders
A single-owned proprietorship where the owner is entitled to keep all profits after tax has been paid but is liable for losses
Private sector
Part of the economy operated by private individuals, groups of institutions
Public sector
Part of the economy operated by the government
Registered Business Name (RBN)
A trading name under which a person (sole trader) or partnership conducts its business or trade
Unlimited liability
Full liability of owner (if their business fails) to the extent of their personal assets
Partnerships
Combined businesses of two to twenty partners sharing resources and expertise
Partnership agreement
A formal document that outlines the duties and responsibilities of the parties of a partnership
Perpetuity
Having ongoing life (that is, never-ending)
Company
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
Incorporation
The process of legally declaring a corporate entity as separate from its owners
Australian Securities and Investments Commission (ASIC)
Independent Australian Government body that acts as Australia’s corporate regulator
Australian Company Number (ACN)
A nine-digit number to be used on a company’s common seal and all public documents involving the company
Limited liability
Shareholders are only personally liable to the level of their original investment in the company
Goods and Services Tax (GST)
A broad-based tax of 10% on most goods, services and other items sold or consumed in Australia
Prospectus
An invitation to the public and potential investors to purchase shares in a particular company
Private limited company (Pty Ltd)
A separate legal entity made up of a maximum of 50 non-employee shareholders
Public listed company (Ltd)
A separate legal entity made up of unlimited shareholders openly traded on the Australian Securities Exchange (ASX)
Social enterprises
Private sector business that distributes profits to the benefit the community rather than the individual shareholders
Social entrepreneur
A person who establishes an enterprise with the aim of solving social problems or effecting social change
Government business enterprise
A government-owned business seeking to sell goods and services at a price to cover costs
Make a profit
An objective that aims to increase in financial gains
To increase market share
An objective that aims to gain a greater percentage of the market through its sales
To improve efficiency
An objective that aims to achieve more output for each unit of input
To improve effectiveness
An objective that aims to achieve a business’ stated objectives by putting in place strategies
To fulfil a market need
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
To fulfil a social need
An objective that aims to revolve around the business as a ‘good citizen’ and promote social objectives through policies and practices
To meet a shareholder’s expectation
An objective that aims to meet shareholders’ expectations through success and profit
Business strategies
Methods and plans that are implemented to develop and grow a business and to meet business objectives
Objectives
Statements of desired achievement that provide direction for the business
Mission statement
A statement that defines what the business wants to achieve now
Vision statement
A statement that outlines the aspirations and values of the business
Values statement
A statement that outlines what the organisation sees as its corporate values and centres on integrity, honesty and ethical behaviour
