Unit 1 The Business Evironment

Question 1

What sectors are businesses often classified into b

Answer 1

Private sector
Secondary sector
Tertiary sector

Question 2

Private sector

Answer 2

Businesses that make direct use of natural resources (fishing,forestry)

Question 3

Secondary sector

Answer 3

Businesses that manufacture products using raw materials (manufacturing,engineering )

Question 4

Tertiary sector

Answer 4

Businesses that provide a service to customers (transporting stocks)

Question 5

What is a business entity

Answer 5

A legal and recognised business organisation to also (maintain a separate legal existence for tax purposes).

Question 6

What is a incorporation

Answer 6

A legal process of forming entity recognised in law

Question 7

What is a unincorporated business

Answer 7

A collection of individuals with no legal identity

Question 8

Incorporated

Answer 8

A legal process of forming a entity recognised in law

Question 9

Incorporated business

Answer 9

Are a separate legal entity so there is a difference between the owner and the business meaning that legal action can be taken against the business

Question 10

Unincorporated businesses

Answer 10

They are not a separate legal entity therefore there is no difference between the owner and business meaning any legal action can be taken against the owner

Question 11

Unlimited liability

Answer 11

It means being responsible for all debts meaning you are putting your personal assets at risk

Question 12

Limited liability

Answer 12

A legal principle that protects businesse owners from being personally responsible for their company’s debts and liabilities

Question 13

Advantages of being a sole trader

Answer 13

Accounts can be private
It’s easy to step up as a sole trader
The owner makes all decisions

Question 14

What is a partnership

Answer 14

Partnerships allow two or more people to run a small business together

Question 15

What is a deed of partnership

Answer 15

An agreed legal document that outlines the rules by which a partnership will be run

Usually outlines:
-who the partners are
-how much each partner has invested

Question 16

Private sector

Answer 16

Consists of organisations controlled by private individuals
-sole traders
-companies

Question 17

Public sector

Answer 17

Consists of organisations controlled by the government

Question 18

Third sector

Answer 18

Made up of organisations that are neither public or private sector

Question 19

Pressure groups

Answer 19

A group of people who come together to influence business activity in interest of themselves

Question 20

A functional approach

Answer 20

This approach separates a business into departments

Question 21

A product approach

Answer 21

This approach separates a business according to the types of products it manufactures

Question 22

Sole trader

Answer 22

Owned and controlled by one person
-unlimited liability

Question 23

Partnerships

Answer 23

Consists of two or more people running a small business together

Question 24

Private limited company

Answer 24

A business owned by shareholders who have invested money into the business

Question 25

Public limited company

Answer 25

A business that sells shares to the public on a stock market

Question 26

Community interest group CIC

Answer 26

A social enterprise set up to use their assets to benefit the community

Question 27

Taxation

Answer 27

Paying money to the government

Question 28

Share issue

Answer 28

A long term source of finance that is only available to limited companies

Question 29

Non -Financial consequences of not listening to stakeholders

Answer 29

-demotivated staff -bad publicity - staff quitting their jobs

Question 30

Financial consequences for not listening to stakeholders

Answer 30

-weaker cash flow position -reduced sales revenue - reduced cash inflows

Question 31

Ways a business can act ethically

Answer 31

-not exploiting the workforce - ensuring a good work life balance -having fair working practices