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Business Basics > Types of Businesses > Flashcards

Types of Businesses Flashcards

1
Q

What are the four types of businesses?

A

sole proprietorship
partnership
private limited company
public limited company

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2
Q

Another name for sole proprietorship?

A

sole trader

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3
Q

Who is a sole trader?

A

a person who has total ownership and responsibility for his/her own business.

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4
Q

examples of sole traders?

A

plumbers. electricians, gardeners, photographers & hairdressers

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5
Q

Characteristics of a sole proprietorship business?

A

1) It is owned and managed by one person (in most cases)

2) it is easy and inexpensive to form

3) He / She manages the business but may have the services of family or friends

4) it is usually financed by the owner

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6
Q

The sale of alcohol requires a spirit license from the ?

A

local magistrate

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7
Q

The sale of food items requires a license from the?

A

local food health authority

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8
Q

The requirement of a special license to sell certain items, in Jamaica is called?

A

The Bureau of Standards

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9
Q

Advantages of being a sole trader?

A

They receive all the profits earned by the business

Decisions can be made in a short period of time

Starting and operating of the business can be done easily

There is no need to disclose business affairs except to tax authorities or creditors when seeking loans. (secrecy)

Many persons find personal satisfaction working for themselves (independence)

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10
Q

Give an example of a creditor

A

a financial institution

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11
Q

Disadvantages of being a sole trader?

A

The owner may find it difficult in getting financial support if expansion of the business is necessary.

The owners may have to work long hours

The business may not continue if the owner dies

The owner may not be in a position to hire specialized task (lack of specialized staff)

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12
Q

What is a partnership?

A

the association of 2 to 20 persons legally operating a business for the common goal of making a profit.

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13
Q

Characteristics of a partnership?

A

the minimum is 2 and the maximum amount of persons is 2o members except in the case of banking where the maximum is 10 members

profits are shared equally or as stated in the partnership deed

capital is provided by the partners as agreed

the retirement or death of one partner may require the reorganization of the partnership

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14
Q

When a number of persons want to form a partnership, a written agreement should be drawn up. This agreement is called…?

A

a Partnership Deed/Article of Partnership

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15
Q

A partnership has __________ liability. (unlimited, limited)

A

unlimited

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16
Q

What is the Partnership Deed/Article of Partnership?

A

This sets out in writing the terms of the partnership.

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17
Q

In absence of a Partnership deed, what is enforced?

A

the Partnership Act

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18
Q

Name 4 types of partners

A

General/Ordinary/Active
Sleeping, Dormant, Docile/Silent
Unlimited
Limited

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19
Q

Who are General/Ordinary/Active Partners?

A

partners who are actively involved in the day-to-day operations of a business

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20
Q

Who are Sleeping/Dormant/Docile/Silent Partners?

A

partners who invest money in the business but do not take an active role in it.

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21
Q

Who are Unlimited Partners?

A

Partners who have unlimited liability status, meaning, this means that if the business becomes bankrupt they are not protected so they will lose their personal assets as well as what they have invested in the business.

22
Q

Who are limited partners?

A

Partners who are protected, meaning if the business goes bankrupt they will lose only what they have invested in the business.

23
Q

What are the benefits of being in a partnership?

A
  • the work load is shared
  • the risks are shared
  • knowledge and skills are shared
  • there is a greater access of finance
24
Q

What are the disadvantages of being in a partnership?

A
  • decision making is slow
  • you are responsible for any mistakes made under any other partner
    -there is unlimited liability in a partnership
25
Q

Define company

A

a group of companions who come together to set up a business

26
Q

What are the two types of companies?

A

private and public limited companies

27
Q

What is the main difference between private and public limited companies?

A

where they receive their finances

28
Q

Define public companies

A

companies whose shares are traded on a public stock exchange. They can trade shares without having to get permission from the board of directors

29
Q

Define private companies

A

companies that are owned by private shareholders and whose shares are not openly traded on a stock exchange.

30
Q

In a private limited company financial support comes from?

A

family members/ personal savings

31
Q

In a public limited company financial support comes from?

A

the general public/loans from financial institutions

32
Q

In which type of company is there limited liability and so Ltd is included in the company name?

A

private company

33
Q

how many shareholders are there in a private company

A

2-50

34
Q

how many shareholders are there in a public company

A

a minimum of seven

35
Q

which type of company is considered a legal entity?
(an individual, company, or organization that has legal rights and obligations.)

A

Private

36
Q

advantages of having a private limited company

A

profits are retained by owners

greater access to capital

greater level of continuity

original owners can stop outsiders from buying up their copmpany

37
Q

Disadvantages of having a private limited company

A

shares cannot be issued to members of the public

liability

shares are not easily transferred without the consent of the directors

financial statements are audited by the registrar of the company

decision-making can be slow

having a smaller number of people from whom to draw funds may restrict growth

38
Q

advantages of having a public limited company

A

all share holders have limited liability

greater access to capital

shares are transferrable

an incorporated business is easier to sell than an unincorporated one

39
Q

disadvantages of having a public limited company

A

Financial statements are audited and published

the business may get too large causing diseconomies of scale

decision making can be slow

a huge amount of administration is needed to register the company and to produce annual reports

detailed accounts must be kept

40
Q

advantages of having a sole trader business

A

you get all the profit from the business

the business needs less capital

financial independence

41
Q

disadvantages of having a sole trader business

A

hard to get loans

you have to provide all the capital on your own

if the business goes bankrupt you are responsible for all the losses

42
Q

Examples of public limited companies?

A

Grace Kennedy
NCB
Berger Paints
JMMB
Supreme Ventures

43
Q

Examples of private limited companies

A

plumber
hair salon
dental practice
accountant
restaurant

44
Q

What are the two legal documents needed to open a business?

A

Memorandum of association
Articles of association

45
Q

What is the memorandum of association?

A

it defines the relationship of a limited liability company with its shareholders

46
Q

Four things included in a memorandum of association?

A

company’s name
physical address of the registered office
names of shareholders
distribution of shares

47
Q

What is the articles of association

A

it specifies the regulations for a company’s operations and defines the company’s purpose.

48
Q

What is stock exchange?

A

a marketplace where stocks and bonds are usually bought and sold

49
Q

How are bonds and corporate bonds usually traded?

A

bonds- over the counter
corporate bonds- stock exchange

50
Q

Who are shareholders?

A

a person, company or institution that owns at least one share of a company’s stock.

Business Basics (9 decks)

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