Chapter 4

Question 1

State de definition of Soletrader

Answer 1

The business is owned by one person.

Question 2

State the difference between Unincorporated businesses and Limited Companies

Answer 2

Unincorporated businesses do not have a separate legal identity, while in Limited Companies the liability of shareholders in a company is limited to only the amount they invest.

Question 3

State the definition of Private limited company

Answer 3

A business owned by shareholders but it cannot sell shares to the public

Question 4

What is meant by the term Dividends?

Answer 4

Payments made to shareholders from the profits(after tax) of a company. They are the return to shareholders for investing in the company

Question 5

Franchising

Answer 5

A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business fro the franchisor

Question 6

Identify one drawbacks of being a soletrader

Answer 6

You do not have the benefit of limited liability

Question 7

Identify 2 features of pubic corporations

Answer 7

They are owned by the government and run by Directors appointed by the government.