Chapter 1 - Understanding business Flashcards
What is a definition for unlimited liability?
If the trader becomes insolvent, the owner’s personal assets may be used to pay their business debts
What act defines standard partnership rules?
Partnership Act 1890
What four main points does the partnership agreement cover
Division of profits
Salaries/commission
Whether interest is to be allowed on partners capital
Whether interest is to be charged on partners drawings
What is the definition of goodwill?
“The difference between the value of a business as a whole, and the net value of its separate assets and liabilities”
What are the owners of an LLP called
members
What are designated members
members who are responsible for carrying out legal and accounting requirements in the LLP
How many designated members does an LLP need
two or more
What are the four financial statement requirements of an LLP
SPL
Balance sheet
Supporting notes to the financial statements
Auditors report
What financial standard dictates the accounting requirements
FRS 102 - financial reporting standard
What are the two types of members of a limited partnership
General and limited
What is the function of a general member in a limited partnership
They have unlimited liability
What are the three requirements of becming a plc
more than 50,000 of issued share capital
at least two shareholders
at least two directors
What are the articles of association?
Rules per company that dictate how the company is run
What are the five required documents for annual accounts of plcs/ltds?
SPL
Balance sheet
Supporting notes to financial statements
Auditors report
Directors report to the shareholders
What three main rules govern charities
Charities act 2011
Charity commission
Statement of reccomended practice (SORP)
