Chapter 19: Types of Business Organisations

Question 1

List the 5 types of business organisations

Answer 1

1. sole trader
2. partnership
3. private company
4. public company
5. state owned

Question 2

what is a sole trader and give examples

Answer 2

a sole trader is where one person owns and runs a business eg a farmer and carpenter

Question 3

give 2 advantages and 2 disadvantages to being a sole trader

Answer 3

adv:
easy to set up and can make all the decisions themselves
dis:
long hours and alone for decision making

Question 4

what is a partnership and give examples

Answer 4

a partnership is when 2-20 people form a business with the intention of making a profit
ie dentists
lawyers
gp’s

Question 5

what is limited liability

Answer 5

means you can only lose what you have put into the business

Question 6

give 2 advantages and 2 disadvantages of a partnership

Answer 6

advantages are that there is more capitol than sole trader and more ideas in circulation
disadvanatages are that there may be arguements, less profit.

Question 7

what is a company and what are shareholders

Answer 7

a company is a business which is owned by shareholders. shareholders invest money and appoint some of them to run the business on their behalf

Question 8

what does private mean

Answer 8

private means shares can only be sold amongst the business founders

Question 9

what does limited mean

Answer 9

limited means there is limited liability

Question 10

what does company mean

Answer 10

company means the owners and name of the business are seperate legal entities

Question 11

give 2 advantages and disadvantages of a private company

Answer 11

an advantage is that the financial liabilty is limited to their shares and they are not required to reveal their financial information to the public
a disadvantage is that they cannot issue shares to the public and that they can lose their investment.