Chapter 4 - Types of Business Organisations Flashcards
what is a sole trader?
a business that is owned and controlled by just one person who takes all the risks and receives all of the profit
what is start-up capital?
the finance needed when first starting up a business
what is a partnership?
a business formed by two or more people who will usually share responsibility for the day-to-day running of the business - partners usually invest capital in the business and will share profit
what is an unincorporated business?
a business that doesn’t have legal identity separate from from its owners - the owners have unlimited liability for business debt
what is unlimited liability?
if an unincorporated business falls, the the owners might have to use their personal wealth to finance any business debt
what are shareholders?
a person or organisation who owns shares in a limited company
what is a private limited company?
often a small to medium sized company thats owned by shareholders who have limited liability - the company cannot sell its shares to the general public
what is a public limited company?
often a large company; owned by shareholders who have limited liability - the company can sell its shares to the general public
what are ordinary shareholders?
the owners of a limited company
what does it mean by limited liability?
the shareholders in a limited liability company which fails only risk losing the amount they have invested in the company and not any of their personal wealth
what does it mean by dividend?
a payment, out of profits to shareholders as a reward for their investment
what does it mean by collateral?
non-current assets offered as security against borrowing
what is a franchise?
a business system where entrepreneurs buy the rights to use the name, logo and product of an existing business
what is a joint venture?
two or more businesses agree to work together on a project and set up a separate business for this purpose
what is a public corporation?
a business organisation that is owned and controlled by the state
