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INTRODUCTION TO BUSINESS > Class 2: Forms of Business Ownership > Flashcards

Class 2: Forms of Business Ownership Flashcards

1
Q

What are the 3 major forms of Business

A

Sole proprietorship
Partnership
Joint stock companies

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2
Q

What is Sole Proprietorship?

A

This is a business owned by a single person called a sole proprietor

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3
Q

What are some of the characteristics of sole proprietorship?

A

It is the easiest, simplest and
oldest form business
it is established for the purpose of
making profit
The owner an withdraw capital
without permission from others
It is not a separate legal entity
It is not a separate legal entity
It is owned by one person
All capital are provided by the owner

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4
Q

What are some of the sources of funds for Sole proprietorship?

A

Borrowing Family and friends
Personal savings
Credit purchases from producers
Donations
Banks

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5
Q

What are some of the advantages of sole proprietorship?

A

It is relatively easy to start
Owner takes all the profits
Quick decision making
Small amount of capital needed to start
Tx exemption
withdrawal of assets/capital at any time

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6
Q

What are some of the disadvantages of sole proprietorship?

A

It has unlimited liability
Limited financial resources
Owner bears all the loss and risks
Lack of continuity if owner perishes

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7
Q

What is Partnership?

A

This is a business jointly owned by 2 or more individuals who are called partners

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8
Q

What are some of the features of a partnershipn?

A

The startup capital is contributed
by the partners
A partnership is owned by up to 2-
20 people except bank
partnerships where it is 2-10
There is unlimited liability
It is not a single entity
It has no board of directors
The withdrawal of capital must be
approved by all other partners

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9
Q

What are the types of partnership?

A

Ordinary and Limited

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10
Q

What are Ordinary partnerships?

A

It can also be referred to as general partnerships, these partnerships involve the active participation and investment of all the partners, the profits and losses are shared equally.

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11
Q

What are Limited Partnerships?

A

These are partnerships whereby the liabilities of a partners is limited to the amount of money he/she invests in the business, they do not take active participation in the management of the business.

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12
Q

What are the 3 kinds of partners?

A

Active, Dormant, Passive

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13
Q

What are some of the sources of funds for partnership?

A

Ploughing back profits
Banks
Contributions of partners
Credit facilities from suppliers

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13
Q

What are some of the sources of funds for partnership?

A

Ploughing back profits
Banks
Contributions of partners
Credit facilities from suppliers

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14
Q

What is a deed of partnership?

A

This is a legal document that regulates the activities for a partnership business, It is a guide and constitution between partners when there is conflict in need of resolution

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15
Q

Another name for deed of partnership is?

A

Partnership agreement or Article of Partnership

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16
Q

List 5 contents of a deed of partnership

A

Name of Partnership business
Location of Partnership business
Names of partners of Partnership business
Description of the nature of the business
Duties of each partner
Rights of each partnership business
Provision of admission of new members
Method of distribution of profits and losses

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17
Q

Mention 5 advantages of Partnerships?

A

Availability of greater financial resources
Greater tendency of continuity with partnerships
Joint and better decision-making
Greater employment opportunities
Tax advantage

18
Q

Mention 5 disadvantages of Partnership?

A

There is unlimited liability
It is not a separate legal entity
Disagreements and conflicts may occur in partnerships
There is slow decision making
It is difficult to transfer ownerships in partnerships, all other partners must approve

19
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

20
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

21
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

21
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

22
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

23
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

24
Q

Define a joint stock company?

A

A Joint stock company is a company where the owners and the business are separate legal entities

25
Q

The owners of a joint stock company?

A

Shareholders/Stakeholders

26
Q

List the 2 types of Joint stock company

A

Private limited liability companies
Public limited liability companies

27
Q

List the 2 types of Joint stock company

A

Private limited liability companies
Public limited liability companies

28
Q

What is a private limited liability?

A

These companies usually have a minimum of 10 and maximum of 50 members

29
Q

What is a private limited liability?

A

These companies usually have a minimum of 10 and maximum of 50 members

29
Q

What is a private limited liability?

A

These companies usually have a minimum of 10 and maximum of 50 members

30
Q

List some of the features of private limited liability?

A

Minimum of 2 and maximum of 50 members
Cannot sell shares to the public
It is not quoted as a stock exchange market
The name ends with limited or ltd
Shareholders have limited liability

31
Q

List some of the features of public limited liability?

A

It has a minimum of 7 numbers and no maximum number
It can sell shares to the public
It is quoted in the stock exchange market
Required by law to post its statement of accounts
The name of the company ends with pls or public
They have limited liability

32
Q

How does one begin the establishment of a joint stock company?

A

The preparations of some documents which will be submitted to registrar of companies for its approval and subsequent registration

33
Q

Mention the documents required for the establishment of a joint stock company

A

Memorandum of association
Article of Association
Prospectus
Certificate of Incorporation
Certificate of training

34
Q

What are the other forms of business ownership?

A

Franchise and Cooperatives

35
Q

What is a franchise agreement?

A

A franchise agreement is an agreement whereby an individual with an established business (franchisor) sells the right to another individual (franchisee) to use sell, distribute using his/her name or brand name

36
Q

List some of the advantages of franchise?

A

Personal ownership of business
Nationally recognized brand name
Financial advise and assistance of franchisor
Lower failure rate

37
Q

List some of the disadvantages of franchise?

A

Large startup costs
Shared profits
Franchisor might go out of business
Restriction of reselling from franchisor

38
Q

Define a Cooperative

A

A Cooperative is a business that is run and managed by the people who use it. They are formed primarily for the welfare of the members

39
Q

List the 6 basic types of Cooperative societies

A

Producer, Credit and thrift, Consumer, Market. Farming, and Housing

40
Q

Mention 5 characteristics of Cooperatives

A

They have open memberships
They are voluntary associations
They are not established to make profits
They are legal entities
They are placed under state control through registration

41
Q

What is an Organizational structure?

A

It is a formal system of task and job reporting relationships which dictates how work tasks are divided, grouped and coordinated in a company

INTRODUCTION TO BUSINESS (7 decks)

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