1 - Business Ownership

Question 1

What Are All The Forms Of Businesses?
(5 Points)

Answer 1

~ Sole traders.

~ LTDs and PLCs.

~ Public and private sector organisations.

~ Non-profit organisations.

~ Social enterprises.

Question 2

What Is Unlimited Liability?
(3 Points)

Answer 2

~ Applies to unincorporated business.

~ Owner and the business, is the same legal entity.

~ Owner is responsible, for all debts the business incurs.

Question 3

What Is Limited Liability?
(3 Points)

Answer 3

~ Applies to incorporated businesses.

~ Owner and the business, are separate legal entities.

~ Owners and shareholders, are not responsible for the debts a business incurs.

Question 4

What Are Sole Traders?
(2 Points)

Answer 4

~ Owned by one individual, who retains all the profits generated by the business.

~ Unincorporated, meaning it has unlimited liability.

Question 5

What Are The Benefits Of Being A Sole Trader?
(4 Points)

Answer 5

~ Cheap and easy to set up.

~ Owner, retains all profit made.

~ Autonomy in decision making.

~ Freedom.

Question 6

What Are The Drawbacks Of Being A Sole Trader?
(4 Points)

Answer 6

~ Unlimited liability.

~ Vulnerabile, due to illness.

~ Finance, is limited.

~ Limited expertise, in some areas.

Question 7

What Are Private Limited Companies (LTD)?
(2 Points)

Answer 7

~ Incorporated.

~ Owned by known shareholders, and managed by directors.

Question 8

What Are The Benefits Of Being A LTD?
(3 Points)

Answer 8

~ Limited liability.

~ Can finance, through selling of shares.

~ Control of who the shareholders are.

Question 9

What Are The Drawbacks Of Being A LTD?
(3 Points)

Answer 9

~ No access to the stock exchange, less finance for expansion.

~ Share of profits.

~ More complex to set up.

Question 10

What Are Public Limited Companies (PLC)?
(2 Points)

Answer 10

~ Incorporated.

~ Able to sell shares to the public.

Question 11

What Are The Benefits Of Being A PLC?
(2 Points)

Answer 11

~ Limited liability.

~ Raise more finance, through selling shares publicly.

Question 12

What Are The Drawbacks Of Being A PLC?
(3 Points)

Answer 12

~ At risk of hostile takeovers.

~ Loss of control, due to shareholders.

~ Need £50,000 of share capital, to be listed on the stock exchange.

Question 13

What Are Social Enterprises?
(3 Points)

Answer 13

~ Non-profit organisations.

~ Have a social objective.

~ Any profit made, is directed to fund social activities.

Question 14

What Are The Issues With Different Forms Of Business?
(4 Points)

Answer 14

~ Liabilities.

~ Ordinary share capital.

~ Market capitalisation.

~ Dividends.

Question 15

What Is Ordinary Share Capital?
(2 Points)

Answer 15

~ External source of finance.

~ Finance raised from shares sold by PLCs.

Question 16

What Is Market Capitalisation?

Answer 16

Value of all shares, issued by a PLC.

Question 17

How Is Market Capitalisation Calculated?

Answer 17

No. Of Shares Issued x Current Share Price

Question 18

What Are The Influences On Share Prices?
(4 Points)

Answer 18

~ Business performance.

~ Interest rates.

~ Speculation.

~ State of the economy.