Mr J Bhardwa

Question 1

What is a sole trader

Answer 1

A business that is individually owned. Finance is provided by the owner

Question 2

Advantages of being a sole trader business

Answer 2

All decisions are made by yourself
More flexible
Business is easier to set up
All profits go to you

Question 3

Disadvantages of being a sole trader

Answer 3

The owner is the only source of capital
Sick = no money into business.
Unlimited liability
Longer working hours

Question 4

Types of sole trader business

Answer 4

Electricians, Plumbers, smaller businesses etc

Question 5

What’s a partnership

Answer 5

The relationship between 2 - 20 people to do trade or business

Question 6

Advantages of Partnerships

Answer 6

• More money is invested into the business
• More contributing ideas to the business

Question 7

What is capital

Answer 7

The money a company uses to operate and grow
Also referred to as a company’s net worth

Question 8

Factors that cause share prices to rise

Answer 8

• Rising profits
• Good publicity
• Improving economic conditions (economic growth, low inflation, low interest rates)

Question 9

Factors that cause share prices to fall

Answer 9

• Falling profits
• General losses
• Worsening economic conditions
• Negative external events

Question 10

Factors that affect share prices for PLCs

Answer 10

The number of people who want to buy shares in the company
The number of people who want to sell their shares

Question 11

The role of shareholders

Answer 11

• They invest in the company buy buying shares.
• They appoint directors to run the company. In large companies, most shareholders aren’t involved in day to day running of the business
• They receive dividends out of the profits made by the company

Question 12

What is market capitalisation

Answer 12

This is the value placed on a company by the Stock Market

Question 13

What is the public sector

Answer 13

PUBLIC SECTOR contains organisations that are owned by the State and run by national or local Government.

Question 14

What is the private sector

Answer 14

PRIVATE SECTOR contains all organisations that are not owned by the State. This includes sole traders, private & public limited companies and non-profit organisations such as social enterprises.

Question 15

What is Nationalisation

Answer 15

A process where the government takes control of a company, industry or asset that is privately owned

Question 16

How can the government nationalise things

Answer 16

1. Buying the shares: The government can purchase 50.1% or more of a company’s shares
2. Full nationalisation: The government takes over an industry’s entire operations/assets
3. Buying Individual companies: The government can purchase individual companies (not common)

Question 17

Benefits of Setting Budgets

Answer 17

• Income/revenue budgets provide sales targets to achieve the objectives as a business
• Comparing budget figures to actual figures helps identify areas of weakness. Action can be taken in the business
• Expenditure budgets help ensure money is allocated where needed

Question 18

Issues with budgets

Answer 18

• Can be difficult to plan realistic figures for sales revenue and some expense, especially for a new business/project
• Budgets can be inflexible. Unforseen opportunities can be missed.
• Failure to reach seasonal budget targets can demotivate staff