types of business organisations

Question 1

what is the meaning of a sole trades

Answer 1

a business that is owned by 1 person

Question 2

advantages of a sole trader

Answer 2

close rs with customers
few legal requirements
freedom
secrecy

Question 3

disadvantages of being a sole trader

Answer 3

no one to discuss business matters with
unlimited liability
limited ideas

Question 4

what is the meaning of limited liabiliity

Answer 4

lability of shareholders are limited to the amount they invest in

Question 5

what is the meaning of unlimited liability

Answer 5

owners of a business can be held responsible for debts of the business they own. their liability is not limited to the investment they made in the business

Question 6

what is the meaning of a partnership

Answer 6

a business owned by 2 or more people

Question 7

what is the meaning of partnership agreement

Answer 7

otherwise known as deed of partnership

a written and legal agreement between partners. not essential for partners to have it but recommended

Question 8

what are the advantages of partnerships

Answer 8

they can focus on what they are best at
more motivated bc both benefits
more capital

Question 9

disadvantages of having a partnership?

Answer 9

unlimited liability
differences in how to operate the business
business does not have separate legal identity
dishonesty

Question 10

what is the meaning of unincorporated business

Answer 10

a business that does not have separat legal identity

Question 11

explain the difference between partnerships and LLP

Answer 11

LLP has limited liability but shares cannot be bought or sold. limited partnerships also has a separate legal identity

Question 12

what is the meaning of incorporated businesses

Answer 12

companies that have separate legal status from their owners
company can make contract or legal agreements
company accs are keeps separate from accounts of owners

Question 13

what is the difference between a company and unincorporated business

Answer 13

a company has separate legal identity and is an incorporated business

Question 14

what is the meaning of shareholders

Answer 14

owners of limited company. they buy shares which represent part ownership of the company

Question 15

what is the meaning of private limited companies

Answer 15

business owned by shareholders but cannot sell shares to public

Question 16

advantages of a private limited company

Answer 16

more capital

limited liability

Question 17

disadvantages of private limited companies

Answer 17

complicated legal matters - the article of association and the memorandum of association
shares cannot be sold or transferred to anyone without agreement of other shareholders - cant sell shares quickly
accounts are less secret where they have to be sent to register of companies so public can inspect them
cant sell shares to public- cant raise large sums of capital

Question 18

what is the articles of association

Answer 18

contains the rules under which the company will be managed such as the rights and duties of all directors

Question 19

what is the memorandum of association

Answer 19

contains info abt company and directors; official name and address of offices

Question 20

what is the meaning of public limited companies

Answer 20

business owned by shareholders but they can sell their shares to public and is tradable on the stoke exchange

Question 21

advantages of public limited companies

Answer 21

limited liability
large capital
incorporated business
high status

Question 22

disadvantages of public limited companies

Answer 22

long legal formalities
more regulations and controls
sell shares are expensive
owners may lose control

Question 23

explain annual general meeting

Answer 23

legal requirement for all companies. shareholders may attend and vote on who they want to be on the board of directors for the coming years

Question 24

what is dividends

Answer 24

payments made to shareholders from profits (after tax) of a company. they are the return to shareholders for investing in the company

Question 25

explain the procedure of annual general meeting

Answer 25

shareholder attend AGM - vote for board of directors who take all important decisions - appoint managers for day to day business

Question 26

explain the meaning of franchise

Answer 26

a business based upon the use of the brand names, promotional logos and trading method of existing successful business. franchisee buys the licence to operate this business from the franchisor

Question 27

advantages to franchisor

Answer 27

faster expansion
management of outlet is responsibility of franchisee
all products must be obtained from the franchisor

Question 28

disadvantages to franchisor

Answer 28

poor management of franchisee will give bad reputation

franchisee keeps profits

Question 29

advantages to franchisee

Answer 29

chances of failure is reduces 
franchisor pays for advertising and training 
all supplies obtained by franchisor 
less decision made 
banks are willing to lend money

Question 30

disadvantages to franchisee

Answer 30

less independence
might not make correct decisions for outlet
licence fee must be paid

Question 31

explain joint venture

Answer 31

2 or more business start a new project tgt sharing risk capital and profits

Question 32

what are the advantages of joint venture

Answer 32

sharing cost
less risk
local knowledge if company is based in country

Question 33

disadvantages of joint venture

Answer 33

profits have to be shared
disagreements over important decisions
different wats of running a business

Question 34

what is public corporations

Answer 34

business in a public sector that is owned and controlled by state or gov

Question 35

advantages of public corporations

Answer 35

no competitors
secure jobs
important program made available to public

Question 36

disadvantages of public corporations

Answer 36

not as much profit
inefficiency
may use for political reasons