Chapter 3 : Forms of ownership

Question 1

MOI

Answer 1

Memorandum of Incorporation

Question 2

ROI

Answer 2

Return on Investment

Question 3

JSE

Answer 3

Johannesburg Stock Exchange/Johannesburg Securities
Exchange

Question 4

AFS

Answer 4

– Annual Financial Statement

Question 4

CIPC

Answer 4

– Companies and Intellectual Property Commission

Question 5

IFRS

Answer 5

– International Financial Reporting Standards

Question 6

What are the 3 different Forms of Ownership

Answer 6

Sole trader/Sole proprietorship
Partnership
Company

Question 7

What are the 7 Factors to consider when choosing a form of ownership.

Answer 7

Legal Persona
Liability (for the debt of the business)
Tax implications
Continuity
Management and Control
Capital-size of the business
Formation Procedures

Question 8

Explain factor of Legal Persona

Answer 8

Refers to the legal right of a business.
* For the business to have a legal personality it has to be registered.
* Once it is registered, the legal rights and obligations (contracts) of the owner and
business are kept separate.

Question 9

Explain factor of Liability (for the debt of the business)

Answer 9

• Refers to who will take responsibility for the debt of the business.
• If the owner has unlimited liability, they could lose their personal belongings if the
  business cannot settle their debts.
• If the owner has limited liability their personal belongings are not at risk if the
  business cannot pay for its debt. (Separate legal persona)