Structures 1 Flashcards
(20 cards)
What are the four primary factors of production?
Land
What is the main purpose of business associations?
To combine resources owned by different people to generate profit.
Why is business regulation necessary?
To address market failures like conflicts of interest
What distinguishes internal from external resources?
Internal resources involve ownership rights (e.g.
What is a sole trader?
A one-person business with no legal separation between the individual and the business.
What is the liability status of a sole trader?
Unlimited personal liability for business debts.
Do sole traders need to register with authorities?
Only with Revenue; no other formal registration is required.
What is an advantage of being a sole trader?
Easy and inexpensive to set up and operate.
What is a disadvantage of sole trading?
Unlimited liability and less favorable tax rules than companies.
What is a partnership under the Partnership Act 1890?
A relationship between persons carrying on a business in common with a view to profit.
Do partnerships have a separate legal personality?
No
What type of liability do partners have?
Unlimited and joint liability.
Is a written agreement required to form a partnership?
No
What is a key advantage of partnerships?
Ease of formation and low cost of operation.
What is a key disadvantage of partnerships?
Unlimited liability and limited investment liquidity.
What defines a company as a separate legal entity?
It has a legal personality distinct from its members
What is meant by “limited liability” in a company?
Shareholders are not personally liable beyond their shareholding.
What is “entity shielding”?
Company assets are protected from claims by shareholders’ personal creditors.
What is a disadvantage of forming a company?
Higher costs and complex regulations
What happens to a company if a shareholder dies?
It continues to exist due to perpetual existence.
