UNIT 1: 1.2 Types of business entities

Question 1

Sole trader

Answer 1

a business that is exclusively owned by one person who has full control of it and is entitled to all of the profit (after tax)

Question 2

Partnership

Answer 2

a business formed by two or more people to carry on a business together, with shared capital investment, and usually shared responsibility

Question 3

Private sector

Answer 3

comprises businesses owned and controlled by individuals or groups of individuals

Question 4

Public sector

Answer 4

comprises organisations accountable to and controlled by central or local government (the state) e.g. VicRoads, Aus Post, PTV

Question 5

Privatization

Answer 5

the sale of public sector organisations to the private sector

Question 6

Unlimited liability

Answer 6

• all owner’s assets are potentially at risk

Question 7

Limited liability

Answer 7

if the company fails is the amount invested in the company, not the wealth of the shareholder

Question 8

PRIVATE (LTD)- Private limited companies

Answer 8

(CANNOT BUY SHARES)

Question 9

PUBLIC (PLC)- Public limited companies

Answer 9

(CAN BUY SHARES)

Question 9

Social enterprise

Answer 9

a business with social and/or environmental objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners.

E.g. providing age car housing

Question 9

Social entrepreneur

Answer 9

a person who establishes an enterprise with the aim of solving social problems or achieving social change

Question 10

Non-profit organisation

Answer 10

any organisation that has aims OTHER THAN making and distributing profit (usually governed by volunteers)

Question 11

Non-governmental organisation (NGO)

Answer 11

a legally constituted body that functions independently of any government and has a specific humanitarian or social aim/purpose (e.g. human rights organisations, Amnesty international)

Question 11

Charities

Answer 11

• dependent on on private contributions
• perform useful social and environmental functions
• set up to raise money and help people in need

Question 12

Triple bottom line- 3 main aims of social enterprises

Answer 12

• economic
  -social
  -environmental objectives

the 3 objectives

Question 13

Distinguish between mixed, free-market and command economies

Answer 13

Mixed- Economic resources are owned and controlled by both private and public sectors

Free-market- Economic resources are owned largely by the private sector, with very little state intervention

Command- Economic resources are owned, planned and controlled by the state

Question 14

Privately held companies

Answer 14

A company that is privately owned and often has family or friends as the shareholders

-the shares are not sold to the wider public and are not traded on a stock exchange

Question 15

Publicly held companies

Answer 15

A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange

Question 16

Types of for-profit social enterprises

Answer 16

• Private sector companies
• Public sector companies
• Cooperatives

Question 17

Private sector company

Answer 17

A type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses

Question 18

Public sector company

Answer 18

A type of social enterprise that produces goods and services that are typically provided by the public sector

–> public corporation: a business enterprise owned and controlled by the state

Question 19

Cooperatives

Answer 19

A business owned and operated by its members, who share the profits

-operates democratically