Liability (2.1.3)

Question 1

Characteristics of Sole Traders and Partnerships?

Answer 1

-They aren’t registered companies
-They can’t sell shares in the business

Question 2

What methods of finance do Sole Traders and Partnerships go for?

Answer 2

-Banks
-Leasing
-Trade Credit

Question 3

Characteristics of Ltd’s and Plc’s?

Answer 3

-Registered companies

Question 4

What methods of finance do Ltd’s and Plc’s go for?

Answer 4

-Business Angels
-Venture Capital
-Share Capital

Question 5

What is Unlimited Liability?

Answer 5

Its when the business and the owner have the same legal identity and their personal assets will be used if there is business debt.

Question 6

What businesses have Unlimited Liability?

Answer 6

Sole Traders and Partnerships

Question 7

What is Limited Liability?

Answer 7

Its when the business and the owner have a separate legal identity and their personal assets wont be used if there is business debt.

Question 8

What businesses have Limited Liability?

Answer 8

Plc’s, Ltd’s and Franchises

Question 9

What sources of finance would a business with limited liability have?

Answer 9

Internal:
-Retained Profit
-Debentures
-Share Capital

Investors:
-Venture Capitalists
-Business Angels

Question 10

What sources of finance would a business with unlimited liability have?

Answer 10

Internal:
-Personal Savings
-Retained Profit

Bank:
-Unsecured loan
-Overdraft
-Mortgage

Suppliers:
-Leasing
-Trade Credit

Investors:
-Crowdfunding
-Peer-peer lending

External Bodies:
Grants