Term 2 - Summaries dd 17 May 2023

Question 1

Name a few forms of Business Ownerships

Answer 1

• Sole Proprietor
• Partnership
• Close Corporation
• Non-Profit Company
• Co-operatives
• Profit Companies

Question 2

Insert the missing words:
…..(a)… is money, or capital goods such as land, …(b) …… and equipment that the owner of a business contributes to …..(c)….a business

Answer 2

a) Capital
b) buildings
c) starting

Question 3

When you have LEGAL PERSONALITY, it means that you have LEGAL rights and duties, for example…..

Answer 3

• enter into contracts
• sue
• be sued

Question 4

Provide a term/definition for the following statement:
When you have a plan to deal with a difficult situation, in order for your organization to continue to function as best possible

Answer 4

Business CONTINUITY

Question 5

Explain what LIMITED LIABILITY means

Answer 5

The owners only loose their investment in the business (only what they put in), if the business is declared as insolvent.

They won’t loose their personal belongings.

Question 6

Explain what UNLIMITED RESPONSIBILITY / LIABILITY means

Answer 6

The owners could lose their PERSONAL belongings when the business has been declared insolvent.

This is because they have taken full RESPONSIBILITY to clear the business debt

Question 7

What do you call the TYPE of tax a business must pay to SARS (South African Revenue Service) , which forms part of the normal business operations

Answer 7

Business Taxation

Question 8

Any business, be it a sole proprietor, partnership, private company or a corporation, the business must adhere to TAX regulations.

The ONLY difference is that each business entity pays a different TAX RATE, based on the entity

Answer 8

13.3% - Sole Proprietorship
23.6% - Partnerships
26.9% - Co-operation

Question 9

What is a Section 21 Company?

Answer 9

Non-profit company

Question 10

With which organization must a non-profit organization register?

Answer 10

Department of Social WELFARE

Question 11

Where does a non-profit organization gets its funds from?

Answer 11

Grants and donations

Question 12

What is the reason for registering a non-profit organization?

Answer 12

It is to benefit the general PUBLIC

Question 13

A non-profit organization has members AND directors. What is the function of the directors?

Answer 13

They run the day-to-day activities

Question 14

Name a few characteristics of a Section 21 (NPO - Non-profit organization)

Answer 14

• No distribution of money or property to
  members
• Official auditors
• Unlimited continuity
• Directors - limited liability

Question 15

ADVANTAGES of an NPO (Non-profit organization)

Answer 15

+ publicly responsible (creates trust)
+ gets funds from National LOTTERIES Trust
+ TAXES = Exempt from paying (don’t pay)
+ Continuity = UNLIMITED
+ LIABILITY of members = Limited

Question 16

DISADANTAGES of an NPO (Non-profit organization)

Answer 16

• DIFFICULT to set-up
• IF DISSOLVED = Transfer assets to another NPO
• FINANCIAL & ACCOUNTING RECORDS = Must be
  kept
• PROFITS = Not allowed to be distributed to
  members / directors
• AGM (Annual General Meetings) = must be held