Chapter-4: Types of business organizations Flashcards
What is a sole trader?
A business owned by one person.
What is limited liability?
When the liability of shareholders in a company is limited to only the amount which they invested.
What is unlimited liability?
When the owners of a business can be held accountable for the debts of the businesses that they own, and their liability is not limited to the investments they made.
What is a partnership?
A form of business in which two or more people agree to own a business.
What is a partnership agreement?
Written and legal agreement between business partners.
What is an unincorporated business? Give examples.
A business which does not have a separate legal entity. Sole traders and partnerships are two examples of an unincorporated business.
What is an incorporated business?
Companies that have separate legal statuses from their owners.
Who are the shareholders?
The owners of a limited company which buy shares that represent part-ownership of a company.
What are private limited companies?
Businesses owned by shareholders that cannot sell shares to the public.
What are public limited companies?
Business owned by shareholders that can sell shares to the public and whose shares are tradeable on the Stock Exchange.
What are dividends?
Payments made to shareholders from the profits of a company.
***What is a franchise?
A business based upon the use of brand names, promotional logos and trading methods of an existing successful business.
***What is a joint venture?
When two or more businesses agree to start a new project together and share the capital, risks and profits.
