Business Awareness Chapter 1.pdf Flashcards
(31 cards)
What is an organization?
A group of people or social arrangement that has formed together to pursue common objectives
What defines a business?
An organization engaged in commercial, industrial, or professional activities
What is the usual aim of private sector businesses?
To achieve profit
What type of information do profit-making businesses require?
- Sales
- Costs
- Cashflow
- Customer needs
- Competitors’ actions
What are the aims of charitable organizations?
Helping disadvantaged communities
What type of information do charitable organizations require?
- Donations/grants
- Internal cost management
- Technical data
What are non-profit objectives typical of?
Public sector organizations and social enterprises in the private sector
What information do non-profit organizations require?
- Government policy
- Economy
- Efficiency
- Effectiveness
What do service organizations provide?
Intangible output
List the features of services.
- Intangibility
- Inseparability
- Variability
- Perishability
What do manufacturing organizations do?
Make physical goods by converting raw materials into finished or semi-finished goods
What are unincorporated businesses?
Businesses created without formal registration with Companies House
What is a consequence of running an unincorporated business?
The business is not a separate legal entity
What does unlimited liability mean for owners of unincorporated businesses?
Owners are personally liable for the debts of the business
What should a partnership agreement cover?
- Profit sharing
- Interest on capital
- Salaries
- Dispute resolution
- Conducting meetings
- Partner transitions
What governs a partnership in the absence of an agreement?
The Partnership Act 1890
What are the rights of partners according to the Partnership Act 1890?
- Share equally in capital and profits
- Indemnification for liabilities
- Participate in management
- Access to firm’s books
- Prevent admission of new partners
What is goodwill?
An intangible asset associated with the purchase of one business by another
How is goodwill calculated?
Purchase price minus net fair market value of identifiable assets and liabilities
What does the veil of incorporation refer to?
The concept that a company is a separate legal person from its owners
What is a private limited company?
A company that cannot sell shares to the public and must end its name with ‘Limited’
What must be filed to obtain a certificate of incorporation?
- Memorandum and articles
- Application for registration
- Statement of proposed officers
- Statement of compliance
- Statement of capital and initial shareholdings
What is a public limited company (plc)?
A company that can issue shares to the general public through the stock exchange
What are the requirements for a public limited company?
- Name must end in ‘public limited company’ or ‘plc’
- Allotted share capital must be at least £50,000
- At least two directors
- Must have a company secretary
