Ownership Of Business

Question 1

Companies are owned by?

Answer 1

Shareholders

Question 2

Co-operatives are owned by?

Answer 2

It’s Members

Question 3

What are some types of business ownership?

Answer 3

1- Sole proprietorship
2- Partnership
3- Limited Liability & Cooperation companies

Question 4

Who holds accountability in a business?

Answer 4

Owners are responsible, e.g Directors are accountable to Shareholders

Question 5

Which business is difficult to dissolve?

Answer 5

Partnership

Question 6

What is the benefit of sole proprietorship?

Answer 6

Flexibility & Direct control
Making your own decision
All profit goes to you after tax
Minimal  legal formalities needed
Secrecy, your competitors won’t know your plans
No need to share financial reports
Low taxation, no cooperate tax 
Easy to dissolve

Question 7

What are some disadvantages of sole proprietorship

Answer 7

Unlimited liability, if one couldn’t pay debts, his personal assets will be possessed unlike companies
Limited skills
Limited funds, high interest rates due to higher risk of not paying back
Taxation, if decides to go cooperative
Trouble finding professional due to unaffordable circumstance
Lack of continuity

Question 8

What are two types of partnerships?

Answer 8

General partnership (unlimited liability)
Limited partnership (limited liability)

Question 9

What is the difference between General & Limited partnership?

Answer 9

General partners have unlimited liability and have full management control of the business.

Limited partners have little to no involvement in management, but also have liability that’s limited to their investment amount

Question 10

What are some advantages of a partnership?

Answer 10

Flexibility of decision making
Combination of different skills & knowledge
Easy to form
No need to share financial reports but to abide by federal laws like labor, food and stuff
Higher Availability of funds

Question 11

What are some disadvantages of a partnership?

Answer 11

Share of profit, more partners, less shares
Difficult to dissolve
Unlimited liability (danger incase of malpractice)
Difference of opinions

Question 12

Which two types of business has separate legal identities & limited liabilities?

Answer 12

Limited companies and Cooperations

Question 13

Business which are privately & restrictively held by a small number of investors is called?

Answer 13

Private limited company

Question 14

How do private companies get funds?

Answer 14

They finance themselves by going public through IPO (initial public offering)

Question 15

How can a public company get their funds?

Answer 15

Through selling of existing or new stocks

Question 16

How is a company created or incorporated?

Answer 16

Through charter or article of incorporation

Question 17

Is it true that stockholder can attend meetings and elects board of directors ?

Answer 17

TRUE

Question 18

How many board of directors are there in a company?

Answer 18

2-3 in a small business

10-15 in a large corporation

Question 19

Least/Max amount of partners in a partnership business?

Answer 19

Least 2, Maximum 20 , could be more

Question 20

What are some advantages of a company?

Answer 20

Tax deduction, ease of operating expenses
Unlimited life, death of owner doesn’t effect its longevity cause it’s a separate entity concept
Combination of economic scale and resources
Limited liability
Able to attract financing through sharing new stocks
Ease of transferring ownership

Question 21

What are some Disadvantages of a company?

Answer 21

Difficult to form
Double taxation, also at time when paying stockholders
Government restrictions
Have to submit financial reports
Have to be registered with SECP to sell stocks

Question 22

What companies law are being used in Pakistan?

Answer 22

Companies Act of 2017 issued by SECP (Securities and Exchange Commission of Pakistan)

Question 23

What law of partnership is being used in Pakistan

Answer 23

Partnership Act of 1932

Question 24

Public sector are funded by whom and what do they do?

Answer 24

They are funded by Government and they insure the availability of basic human health, drinking water and cleaning

Question 25

Are clubs and societies aim for profit and where do they get their profit from?

Answer 25

They do not aim for profit but there profit comes from members subscription fees

Question 26

What are cooperatives and do they aim for a profit?

Answer 26

No they do not. They voluntarily come together to create a group who provides services to society and its members