1.2 Business Ownership

Question 1

Sole trader

Answer 1

someone who sets up in business on his or her own.

A sole trader is a form of business that is owned and managed by one person.

Question 2

Profit

Answer 2

measures the difference between the values of a business’s revenue (sales) and its total costs.

Question 3

Unlimited liability

Answer 3

means that the personal possessions of the owners of a business are at risk if there are any problems. There is no limit to the amount of money the owners may have to pay out.

Question 4

partnership

Answer 4

occurs when two or more people join together in a business enterprise to pursue profit.

a partnership is created when two or more people set up in business to pursue a common purpose

Question 5

A Deed of Partnership

Answer 5

an agreement between partners that sets out the rules of the partnership, such as how profits will be divided and how the partnership will be valued if someone wants to leave.

Question 6

Stakeholders

Answer 6

individuals and organisations that are affected by, and affect, the activities of a business.

Question 7

company

Answer 7

a business that has its own legal identity. It can own items, owe money, sue and be sued.

Question 8

shareholder

Answer 8

a person or an organisation that owns part of a company.

Each shareholder owns a ‘share’ of the business.

Question 9

A flotation

Answer 9

occurs when a private limited company (ltd) becomes a public limited company (plc) and has its shares listed on the Stock Exchange.

Question 10

The Stock Exchange

Answer 10

a market for buying and selling shares of public limited companies. Large numbers of shares are being bought and sold all the time.

Question 11

A not-for-profit organisation

Answer 11

set up to achieve objectives other than profit; for example, a charity.