Class 2: Forms of Business Ownership

Question 1

What are the 3 major forms of Business

Answer 1

Sole proprietorship
Partnership
Joint stock companies

Question 2

What is Sole Proprietorship?

Answer 2

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

Question 3

What are some of the characteristics of sole proprietorship?

Answer 3

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

Question 4

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

Answer 4

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

Question 5

What are some of the advantages of sole proprietorship?

Answer 5

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

Question 6

What are some of the disadvantages of sole proprietorship?

Answer 6

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

Question 7

What is Partnership?

Answer 7

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

Question 8

What are some of the features of a partnershipn?

Answer 8

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

Question 9

What are the types of partnership?

Answer 9

Ordinary and Limited

Question 10

What are Ordinary partnerships?

Answer 10

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.

Question 11

What are Limited Partnerships?

Answer 11

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.

Question 12

What are the 3 kinds of partners?

Answer 12

Active, Dormant, Passive

Question 13

What are some of the sources of funds for partnership?

Answer 13

Ploughing back profits
Banks
Contributions of partners
Credit facilities from suppliers

Question 13

What are some of the sources of funds for partnership?

Answer 13

Ploughing back profits
Banks
Contributions of partners
Credit facilities from suppliers

Question 14

What is a deed of partnership?

Answer 14

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

Question 15

Another name for deed of partnership is?

Answer 15

Partnership agreement or Article of Partnership

Question 16

List 5 contents of a deed of partnership

Answer 16

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

Question 17

Mention 5 advantages of Partnerships?

Answer 17

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

Question 18

Mention 5 disadvantages of Partnership?

Answer 18

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

Question 19

Define a joint stock company?

Answer 19

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

Question 20

Define a joint stock company?

Answer 20

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

Question 21

Define a joint stock company?

Answer 21

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

Question 21

Define a joint stock company?

Answer 21

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

Question 22

Define a joint stock company?

Answer 22

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

Question 23

Define a joint stock company?

Answer 23

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

Question 24

Define a joint stock company?

Answer 24

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

Question 25

The owners of a joint stock company?

Answer 25

Shareholders/Stakeholders

Question 26

List the 2 types of Joint stock company

Answer 26

Private limited liability companies Public limited liability companies

Question 27

List the 2 types of Joint stock company

Answer 27

Private limited liability companies Public limited liability companies

Question 28

What is a private limited liability?

Answer 28

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

Question 29

What is a private limited liability?

Answer 29

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

Question 29

What is a private limited liability?

Answer 29

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

Question 30

List some of the features of private limited liability?

Answer 30

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

Question 31

List some of the features of public limited liability?

Answer 31

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

Question 32

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

Answer 32

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

Question 33

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

Answer 33

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

Question 34

What are the other forms of business ownership?

Answer 34

Franchise and Cooperatives

Question 35

What is a franchise agreement?

Answer 35

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

Question 36

List some of the advantages of franchise?

Answer 36

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

Question 37

List some of the disadvantages of franchise?

Answer 37

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

Question 38

Define a Cooperative

Answer 38

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

Question 39

List the 6 basic types of Cooperative societies

Answer 39

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

Question 40

Mention 5 characteristics of Cooperatives

Answer 40

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

Question 41

What is an Organizational structure?

Answer 41

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