Chapter 4

Question 1

Define the term sole trader

Answer 1

A business owned by one person.

Question 2

Define the term limited liability

Answer 2

The liability of the shareholders in a company is only limited to the amount they invested.

Question 3

Define the term unlimited liability

Answer 3

The owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the amount they invested in the business.

Question 4

Define the term partnership

Answer 4

A form of business in which two or more people agree to jointly own a business.

Question 5

Define the term shareholders

Answer 5

The owners of a limited company. They buy shares which represent part ownership of a company.

Question 6

Define the term dividends

Answer 6

Payments made to shareholders from the profits of a company. They are the return to shareholders for investing in the company.

Question 7

Define the term franchise

Answer 7

A business based upon the use of the brand names, promotional logos and trading methods of an existing successful business.