Miss Chambers Knowledge Test Flashcards
Primary sector
All activities that obtain natural resources; e.g. farming, mining, fishing, forestry and obtaining water
Secondary sector
All manufacturing and construction activities that create finished goods
Tertiary sector
Selling finished goods and providing services
Public sector
Organisations that are owned by The State and run by local or national government
Private sector
Organisations that are not owned by The State, including sole traders, partnerships and limited companies
Third sector
The part of an economy comprising non-governmental and non-profit-making organisation, including charities, voluntary and community groups
Charity
A charity does not aim to make a profit. It relies on donations and grants to raise funds that allow it to carry out its activities. It does not pay any tax if its income is greater than its expenditure.
Community interest company
A community interest company (CIC) gains most of its income from trading but uses most of its profits to support a social enterprise. However, some of the profits may be paid to investors and owners. Unlike a charity, a CIC does pay tax on its profits
Advantages of being a sole trader
The owner keeps all of the profits
The owner has complete control
Quicker and easier to set up than a partnership or a limited company
Disadvantages of being a sole trader
The only source of capital is the one owners plus what he/she can borrow
Long hours and the business probably loses money if the owner is ill or on holiday
Unlimited liability
Unlimited liability
Unlimited liability means that if the business fails, the owner is responsible for all of its debts, even if he/she has to sell personal possessions to pay the business debts
Partnership
This is a business that is jointly owned and controlled by more than one person
Advantages of being a partnership
More than one source of capital
Partners can specialise, which means concentrating on an area of expertise
The workload and responsibilities are shared
Quicker and easier to set up than a limited company
Disadvantages of being a partnership
The profits have to be shared between the partners
There can be disagreements between the partners
The partners still have unlimited liability
The partners should produce a deed of partnership
Deed of partnership
a legal document stating how that particular partnership would operate
