Forms Of Ownership

Question 1

Name 2 features of a sole trader.

Answer 1

• One person owns and runs the business

* Has unlimited liability

Question 2

Name 4 features of a partnership.

Answer 2

• 2-20 people own and run the business
• Split the profits
• Has unlimited liability but there are exceptions
• Produces a Deed of Partnership

Question 3

Name 4 features of a Private Limited Company (Ltd).

Answer 3

• 2 or more shareholders
• Cannot sell shares on the Stock Market
• Limited liability
• Business has a separate legal identity

Question 4

Name 4 features of a Public Limited Company (PLC).

Answer 4

• 2 or more shareholders
• Sell shares on the Stock Market
• Limited liability
• Business has a separate legal identity

Question 5

Name the 7 usual business objectives.

Answer 5

• Profit
• Social Benefit
• Increasing sales
• Increasing market share
• To provide effective service to the public
• Survival
• Growth

Question 6

What are the advantages of a sole trader?

Answer 6

• Easy to set up
• You get to be your own boss
• You decide what happens to any profit

Question 7

What are the disadvantages of a sole trader?

Answer 7

• You have to work long hours and don’t get many holidays
• You have unlimited liability
• Sole traders are unincorporated

Question 8

What are the advantages of a partnership?

Answer 8

• More owners means more ideas

* More owners means more capital can be put into the business

Question 9

What are the disadvantages of a partnership?

Answer 9

• Each partner is legally responsible for what all other partners do
• They have unlimited liability but sole can have limited liability
• More owners means more disagreements

Question 10

What are the advantages of a Private Limited Company?

Answer 10

• They have limited liability

* They are incorporated, the company can continue trading after a shareholder dies

Question 11

What are the disadvantages of a Private Limited Company?

Answer 11

• More expensive to set up because of all the legal paperwork you have to do
• Company is legally obliged to publish its accounts every year

Question 12

What are the advantages of a Public Limited Company?

Answer 12

• Much more capital can be raised by a PLC than by any other kind of business
• That helps the company to expand and diversify

Question 13

What are the disadvantages of a Public Limited Company?

Answer 13

• Each shareholder has very little say in how the company is ran
• It’s easy for someone to but enough shares to take over the company
• Large number of shareholders so might be hard for a general agreement on company objectives