business forms

Question 1

advantages of being a sole trader

Answer 1

-quick & easy to set up and make decisions
-owner has complete control over decision-making
-keep 100% of profits
-no info is public

Question 1

disadvantages of being a sole trader

Answer 1

-unlimited liability
-won’t benefit from eos
-no sick/holiday pay
-difficult to raise money

Question 2

advantages of being a ltd

Answer 2

-limited liability
-sell shares to family and friends

Question 3

disadvantages of being a ltd

Answer 3

-accounts aren’t private
-more expensive than a sole trader to set up
-can’t sell shares on the stock market, limiting funds

Question 4

advantages of being a plc

Answer 4

-limited liability
-can sell shares to public, raising funds
-investors are more likely to lend more cash

Question 5

disadvantages of being a plc

Answer 5

-more expensive
-needs to publish info

Question 6

objectives of a public sector

Answer 6

serve the public

Question 7

objectives of a private sector

Answer 7

survive
maximise profits
growth
dividends for shareholders

Question 8

features of non-profit organisations (charities)

Answer 8

-puts all profits into the cause, not shareholders
-run by volunteers
-social objectives

Question 9

features of non-profit organisations (mutual)

Answer 9

-works for the benefit of a select group of people, not general public
-revenues come from membership fees
-examples are unions

Question 10

reasons for choosing diff business forms

Answer 10

-for the protection of limited liability, such as a construction company, so they sue the business not the individual
-objectives of the business
-nature of the business
- what products and services are being offered

Question 11

reasons for changing business form

Answer 11

-raise finance ( e.g sole trader -> ltd to sell shares or ltd -> plc to sell more share son stock market )

Question 12

what is limited liability

Answer 12

• owner is a seperate legal identity to the business and is not liable for payment of debts from personal debts

Question 13

what is unlimited liability

Answer 13

-the owner is responsible for any debts of the business and has to use personal assets (car, house etc. ) to repay

Question 14

why do shareholders invest?

Answer 14

-in hope of return on investment in the form of dividends

Question 15

influences on share price

Answer 15

-supply and demand
-interest rates
-political climate

Question 16

definition of dividend

Answer 16

a sum of money paid by a business to its shareholders

Question 17

definition of market capitialisation

Answer 17

the value of a business that is traded on the stock market
total number of shares X share price