Topic 2- p1+2

Question 1

Sole trader

Answer 1

One person

Question 2

Partnership

Answer 2

2 - 20 (+) people sharing the responsibility and profits and giving capital.
Unlimited liability

Question 3

Limited company

Answer 3

Separate legal entity to the owners.
Owned bu shareholders holding the capital

Question 4

Plc

Answer 4

Sell shares on stock markets

Question 5

Ltd

Answer 5

Cant sell shares on the stock market

Question 6

Owners capitial

Answer 6

No interest
No share of profits through dividends
No loss of control
Slow
May not be enough

Question 7

Partners capital

Answer 7

No interest or repayment
New partners can add expertise and share workload
Control must be shared
Not all partners may be able to contribute

Question 8

Share capital

Answer 8

No interest or prepayment
Dividends paid out will depend on what they can afford
No security (asset to repay a loan) is needed
Reduce level of capital gearing

Question 9

Debentures

Answer 9

Long term loan from investors that may be secured on the assets of a company
Repaid at a dead line
No loss of control
Interest has to be paid
Increase capital gearing
May require security

Question 10

Bank loans

Answer 10

Fixed amnt that must be repaid with interest over an amount of time (eg monthly)
Needs security
No large sum of repayments as u pay through out a period
No loss of control
Increases gearing

Question 11

Mortgage

Answer 11

Bank loan to buy property and is secured on that property.
Long term and external
Monthly repayments affordable
Interest
Large initial deposit
Increases capital gearing

Question 12

Bank overdraft

Answer 12

Negative balance
Interest
Flexibility
Repaid when the b is able to
Rate of interest is high
Overdraft facility can be cancelled by the bank without notice