Unit 1 - What Is Business Flashcards
(30 cards)
What is the primary purpose of a business?
To produce goods and services in order to meet customer needs and generate profit.
What are the three sectors of the economy?
Primary (raw materials), Secondary (manufacturing), and Tertiary (services).
Define a sole trader.
A business owned and operated by one person, who has unlimited liability.
What is a partnership?
A business owned by two or more people who share profits and responsibilities.
What is a private limited company (LTD)?
A company that is privately owned, limits liability to shareholders, and does not trade shares publicly.
What is a public limited company (PLC)?
A company that sells shares to the public on the stock exchange and has limited liability.
Define revenue.
Revenue = Price × Quantity Sold.
What is profit?
Profit = Total Revenue - Total Costs.
What is the difference between an aim and an objective?
An aim is a broad goal or purpose of a business, while an objective is a specific, measurable step toward achieving it.
List four common business objectives.
Profit maximisation, growth, survival, and social/ethical goals.
Define fixed costs.
Costs that do not change with output (e.g., rent, salaries).
Define variable costs.
Costs that change directly with output (e.g., raw materials).
Give an example of a stakeholder.
Employees, customers, suppliers, shareholders, local community.
What are dividends?
Payments made to shareholders from company profits.
Define opportunity cost.
The next best alternative foregone when a decision is made.
What is limited liability?
When a business owner is only liable for the money they have invested.
What is unlimited liability?
When a business owner is personally responsible for all business debts.
What is the role of an entrepreneur?
To take risks and organise resources to start and run a business.
Name two advantages of being a sole trader.
Full control and keeps all profits.
Name two disadvantages of being a sole trader.
Unlimited liability and long hours.
What is the difference between public and private sector organisations?
Public sector is government-owned; private sector is owned by individuals/businesses.
What is a not-for-profit organisation?
An organisation that reinvests surplus income to achieve its objectives rather than distributing it as profit.
What is the role of a business in the economy?
To provide goods and services, create employment, and generate income.
Define market share.
The percentage of total sales in a market held by one business.
