Unit 1 AOS 2 KK2

Question 1

Unincorporated

Answer 1

Businesses and owners are recognised together under the law.

Question 2

Incorporated

Answer 2

Regardless of what happens to the owner, the business will continue to be operated.

Question 3

Unincorporated businesses

Answer 3

Sole trader, partnership

Question 4

Incorporated businesses

Answer 4

Company -> private, public

Question 5

Sole trader

Answer 5

owned and operated by one person, allows owner to have all the decision making power

Question 6

Sole trader features

Answer 6

Simple to set up and operate, has unlimited liability

Question 7

Benefits sole trader

Answer 7

low cost to start up
complete control and no disputes as the individual has complete say
profits are kept solely by the individual

Question 8

Weaknesses sole trader

Answer 8

Unlimited liability
workload higher since only one individual running the business
lack of ideas fro growth and improvement

Question 9

Partnership

Answer 9

Business structure owned by 2 to 20 people

Question 10

Partnership features

Answer 10

easy to set up inexpensive
requires sperate tax file number
unlimited liability
shared control with business partners
each partner responsible for superannuation arrangements

Question 11

Partnership benefits

Answer 11

Low cost to start up
workload shared between partners less stress
more ideas for growth and improvement
pooled funds can allow more money to be put into the business.

Question 12

Partnership weaknesses

Answer 12

unlimited liability
potential conflict between partners

Question 13

Private limited company

Answer 13

Business owned by 50 shareholders, eg: small business like legal firm, accountants
shares are not traded on the stock exchange

Question 14

PL company features

Answer 14

Separate legal entity
Limited liability
complex business structure to start up and run
expensive to start up
must be registered for GST
the money the business earns belongs to the company
Annual company tax return to be lodges with the ATO

Question 15

Private company strength

Answer 15

Limited liability
perpetuity of continual existence -> cash flow to continue
extra capital by issuing more shares

Question 16

Private company weaknesses

Answer 16

cost and expense higher due to set up since sperate legal entity
additional compliance costs
potential for disputes

Question 17

Public listed company

Answer 17

Business that is owned by shareholders and is listed on the Australian Securities Exchange, The company listed on the stock exchange for members of the public who can trade shares in it.

Question 18

Public company features

Answer 18

Separate legal entity
unlimited number of shareholders
limited liability
money the business earns belongs to the company
annual company tax return to be lodged with the ATO

Question 19

Public company strengths

Answer 19

Limited liability
perpetuity of continual existence
access to public finance as they are on the ASX

Question 20

Public company weaknesses

Answer 20

expensive to start up and run due to being a separate legal entity
Public disclosure

Question 21

Social enterprise

Answer 21

Business that aims to make a profit with the objective of fulfilling a social need.
They exist to benefit society rather than owners, they run like a business and unlike charities they do not rely on donations as their main source of income.

Question 22

Social enterprise features

Answer 22

Can open up new markets
Meeting social need cna have a positive affect or profit and market share
significant operating costs
can be difficult to focus on both social and financial objectives

Question 23

Social enterprise strengths

Answer 23

new markets can be opened up
positive brand image is created

Question 24

Social enterprise weaknesses

Answer 24

Difficult focusing on both financial and social objectives at once
Significant operating costs as they need to spend money funding the activities to fulfil a social need

Question 25

Government business enterprise

Answer 25

commonwealth entity owned by the government that act under general business principles and aim to make a profit. is funded by the government.

Question 26

Government business enterprise features

Answer 26

carries out gov policies while delivering community services which businesses in the private sector may be hesitant to do
can operate with some independence from government eg: australia post, nbn

Question 27

GBE strengths

Answer 27

provides healthy competition in the private sector
access to funding from government -> sustainability for business.

Question 28

GBE weakness

Answer 28

potential political interference cna impact how the business runs
excessive regulations can create inefficiencies
can be less accountability due to government ownership