1.2 Types of organizations

The public sector is owned and controlled by _______________________

• The government

• Individuals and households

• Shareholders

• The general public

What does limited liability refer to?

• Shareholders' personal assets cannot be claimed by creditors for money owed by the firm

• The maximum a shareholder can lose is equal to their initial investment, but nothing more

• The directors are exempt from adhering to company law and legislation

• Both (A) and (B)

Which of the following is not a for-profit organization?

• Public-private parnerships

• Sole traders

• Limited liability companies

• Non-governmental organizations

If an individual wants full and total control over a firm and wishes to minimize the legal bureaucracy in setting up, which of the following is most suitable?

• Partnership

• Sole proprietorship

• Private limited company

• Public limited company

Which of the following is not a valid advantage of a sole proprietorship?

• The proprietor has limited liability

• The proprietor has total control and more flexibility

• Fewer legal formalities are required

• The proprietor does not have to share profits with others

Which of the following is not a disadvantage of being a sole trader?

• Unlimited liability

• Limited availability of, and access to, funds

• Time consuming to set up

• Continuity challenges

Who do the profits made by a sole trader belong to?

• The government

• The sole trader

• Employees

• Shareholders

Which of the following is not a characteristic of partnerships?

• Limited liability for all members

• A deed of partnership is drawn out

• Shared control, ownership and profits

• Greater continuity

Which of the following is not an advantage of a partnership?

• Larger amounts of capital can be raised by selling shares to friends and family

• There is greater continuity compared with sole traders

• There is a greater wealth of knowledge and expertise than setting up as sole traders

• Corporate confidentiality is relatively high as financial statements do not have to be released to the public

Which of the following is not a disadvantage of partnerships?

• Financial resources are pooled

• Partners have unlimited liability

• Profits are shared with all partners

• Conflicts in decision-making are more likely to occur