Types of business entities Definitions

Question 1

Private sector

Answer 1

the part of the economy not owned or directed by the government

Question 2

Multinational company

Answer 2

a company that operates in at least two countries(one of which is not the company’s home country)

Question 3

Profit

Answer 3

total revenue - total costs

Question 4

Public sector

Answer 4

the part of the economy controlled or owned by the government

Question 5

For-profit commercial enterprise

Answer 5

a business that earns profits which are distributed to owners or shareholders(profits may have priority over other objectives)

Question 6

Sole trader

Answer 6

an individual who runs and owns a business alone

Question 7

Unlimited liability

Answer 7

a situation where the owners of a business are personally responsible for all the debts of a business if it fails(the owners and the business are not legally separated)

Question 8

Partnership

Answer 8

a business run by two or more people who share the responsibility for the business and the profits/losses

Question 9

Company

Answer 9

a business owned by multiple shareholders who have limited liability

Question 10

Shareholder

Answer 10

someone who owns a share of a business

Question 11

Dividend

Answer 11

a sum of money paid regularly(usually annually) by a company to its shareholders out of its profits

Question 12

Reserve

Answer 12

part of a company’s profits added to capital rather than paid as a dividend

Question 13

Limited liability

Answer 13

a situation where the owners of a business are not personally responsible for the debts of the business if it fails(owners and business are legally separated)

Question 14

Initial public offering(IPO)

Answer 14

a situation where a business sells all or part of the business to external stakeholders for the first time

Question 15

Takeover

Answer 15

a type of acquisition where a company takes control of another company(by buying the majority of the target company’s shares). It can either be hostile or friendly(usually hostile)

Question 16

Social enterprise

Answer 16

an organisation that has a social and/or environmental purpose at its core(it describes the primary purpose of a business, not its legal form)

Question 17

For-profit social enterprise

Answer 17

a type of social enterprise that earns revenue and profits, but integrates social and/or environmental impact directly into its business model

Question 18

Public sector for-profit social enterprise

Answer 18

a type of social enterprise that produces goods and services that are typically provided by the public sector

Question 19

Private sector for-profit social enterprise

Answer 19

a type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses

Question 20

Cooperative

Answer 20

a business owned and operated by its members, who share the profits

Question 21

Grant

Answer 21

a sum of money given by a government or other organisation for a particular purpose

Question 22

Patient capital

Answer 22

a long-term investment where investors are prepared to ait for an extended period of time before seeing any returns

Question 23

Greenwashing

Answer 23

the act of making a false impression or giving misleading information about how a company’s products are environmentally sound

Question 24

Social washing

Answer 24

the act of presenting a company as socially responsible or ethical(through misleading information) despite their lack of social initiatives

Question 25

Offshoring

Answer 25

the process in which a business moves some of its business operations to another country

Question 26

Non-profit social enterprise

Answer 26

a type of social enterprise that produces goods and services to meet human needs, where no profits can be earned(any surpluses must be, by law, reinvested into the business)

Question 27

Surplus

Answer 27

(specifically for non-profits)the total revenue left after total costs(it must be reinvested back into the business)

Question 28

Endowment

Answer 28

a gift of money given to a non-profit social enterprise

Question 29

Non-governmental organisation

Answer 29

a non-profit, private organisation which aims to benefit society and the government and operate outside of governmental control